The rupee is the official currency of the Islamic Republic of Pakistan. Although the rupee is subdivided into 100 paisa, the paisa is used today only for accounting purposes and is not circulated through coins or banknotes. In Pakistan, large amounts of rupees are counted in groupings of thousands, hundred thousands and 10 millions. The name of the currency derives from the Sanskrit word rupyakam, which translates into English as the precious metal silver. The Pakistani rupee has been the official currency since 1948, but it was not decimalised until 1961. The issuing authority of the rupee is the State Bank of Pakistan.
The rupee was introduced as the nation’s first currency after its independence from Britain and separation from India. After the Pakistani rupee was created in 1947, it was circulated for the first year as Indian coins and banknotes stamped with “Pakistan.” Original coins and banknotes began circulating in 1948. The original rupee was subdivided into 16 annas, 64 pice or 192 pie. In 1961, the currency was decimalised, and the pice was renamed as the paisa to become the subunit of the rupee. Today, however, the lowest denominated coin is 1 rupee.
After independence, the Reserve Bank of India served as the central bank of both India and Pakistan, but the State Bank of Pakistan was established the following year, in 1948. The State Bank, at first, only issued currency, but in 1956, the bank was given the power to regulate the nation’s monetary and credit system. The State Bank was officially nationalised in 1974, but in 1997 the bank was made an autonomous body.
The economy of Pakistan is officially labeled as semi-industrialized, but it suffers from severe regional inequalities. Since the 1990s, Pakistan has suffered from an economic slowdown, but reforms put in place in the mid-2000s brought the annual growth rate up to 7 percent. The biggest change in the economy of Pakistan has been a transformation from a primarily agricultural economy to a service-based economy. Today, agriculture accounts for 20 percent of the GDP, and services contribute to 53 percent of the GDP. Pakistan’s most important exports are textiles, chemicals, iron and steel. Although the country had to borrow $100 billion in emergency funds because of the economic crises, the economy is expected to recover after 2011 if their inflation rate of more than 24 percent can be lowered.