History
The origin of the word "rupee" is found in the Sanskrit word rūp or rūpā, which means "silver" in many Indo-Aryan languages. The Sanskrit word rūpyakam (रूप्यक) means coin of silver. The derivative word Rūpaya was used to denote the coin introduced by Sher Shah Suri during his reign from 1540 to 1545 CE.
The Pakistani rupee was put into circulation after the country became independent from the British Rule in 1947. For the first few months of independence, Pakistan used Indian coins and notes with "Pakistan" stamped on them. New coins and banknotes were issued in 1948. Like the Indian rupee, it was originally divided into 16 annas (آن), each of 4 pice (پيس) or 12 pie (پاى). The currency was decimalised on 1 January 1961, with the rupee subdivided into 100 pice, renamed (in English) paise (singular paisa) later the same year. However, coins denominated in paise have not been issued since 1994.
Coins
In 1948, coins were introduced in denominations of 1 pice, ½, 1 and 2 annas, ¼, ½ and 1 rupee. 1 pie coins were added in 1951. In 1961, coins for 1, 5 and 10 pice were issued, followed later the same year by 1 paisa, 5 and 10 paise coins. In 1963, 10 and 25 paise coins were introduced, followed by 2 paise the next year. 1 rupee coins were reintroduced in 1979, followed by 2 rupees in 1998 and 5 rupees in 2002. 2 paise coins were last minted in 1976, with 1 paisa coins ceasing production in 1979. The 5, 10, 25 and 50 paise all ceased production in 1994. There are two variations of 2 rupee coins; most have clouds above the Badshahi Masjid but many don't have. This is noted by very few people. The one and two rupee coins were changed to aluminium in 2007
| Currently Circulating Coins | ||||||
|---|---|---|---|---|---|---|
| Depiction (Front) | Depiction (Back) | Value | Year in Use | Composition | Front Illustration | Back Illustration |
 |  | Re. 1 | 1998 - Present | Bronze and Aluminium | Quaid-e-Azam, Muhammad Ali Jinnah | Hazrat Lal Shahbaz Qalandar Mausoleum, Sehwan Shareef |
 |  | Rs. 2 | 1998 - Present | Brass and Aluminium | Crescent and Star | Badshahi Masjid, Lahore |
 |  | Rs. 5 | 2002 - Present | Cupro-nickel | Crescent and Star | |
Banknotes
In 1947, provisional issues of banknotes were made, consisting of Government of India and Reserve Bank of India notes for 1, 2, 5, 10 and 100 rupees overprinted with the text "Government of Pakistan" in English and Urdu. Regular government issues commenced in 1948 in denominations of 1, 5, 10 and 100 rupees. The government continued to issue 1 rupee notes until the 1980s but other note issuing was taken over by the State Bank in 1953, when 2, 5, 10 and 100 rupees notes were issued. Only a few 2 rupees notes were issued. 50 rupees notes were added in 1957, with 2 rupees notes reintroduced in 1985. In 1986, 500 rupees notes were introduced, followed by 1000 rupees the next year. 2 and 5 rupees notes were replaced by coins in 1998 and 2002. 20 rupee notes were added in 2005, followed by 5000 rupees in 2006.
All banknotes other than the 1 and 2 rupees feature a portrait of Muhammad Ali Jinnah on the obverse along with writing in Urdu. The reverses of the banknotes vary in design and have English text. The only Urdu text found on the reverse is the Urdu translation of the Prophetic Hadith, "Seeking honest livelihood is worship of God."
The banknotes vary in size and colour, with larger denominations being longer than smaller ones. All contain multiple colours. However, each denomination does have one colour which predominates. All banknotes feature a watermark for security purposes. On the larger denomination notes, the watermark is a picture of Jinnah, while on smaller notes, it is a crescent and star. Different types of security threads are also present in each banknote.
| Banknotes before the 2005 Series | ||||||
|---|---|---|---|---|---|---|
| Image | Value | Dimensions | Main Colour | Description - Reverse | Status | |
| Obverse | Reverse | |||||
 |  | Re. 1 | 95 × 66 mm | Brown | Tomb of Muhammad Iqbal in Lahore | No longer in Circulation |
 |  | Rs. 2 | 109 × 66 mm | Purple | Badshahi Masjid in Lahore | |
 |  | Rs. 5 | 127 × 73 mm | Burgundy | Khojak Tunnel in Balochistan | |
 |  | Rs. 10 | 141 × 73 mm | Green | Mohenjo-daro in Larkana District | No longer printed - Still in Circulation |
 |  | Rs. 50 | 154 × 73 mm | Purple and Red | Alamgiri Gate of the Lahore Fort in Lahore | |
 |  | Rs. 100 | 165 × 73 mm | Red and Orange | Islamia College in Peshawar | |
 |  | Rs. 500 | 175 × 73 mm | Green, tan, red, and orange | The State Bank of Pakistan in Islamabad | |
 |  | Rs. 1000 | 175 × 73 mm | Blue | Tomb of Jahangir in Lahore | |
The State Bank has started a new series of banknotes, phasing out the older designs for new, more secure ones.
| 2005 Series | ||||||
|---|---|---|---|---|---|---|
| Image | Value | Dimensions | Main Colour | Description - Reverse | Date of issue | |
| Obverse | Reverse | |||||
 |  | Rs. 5 | 115 x 65 mm | Greenish Grey | Gwadar port, which is a mega project in Balochistan (Pakistan) | July 08, 2008 |
 |  | Rs. 10 | 115 × 65 mm | Green | Bab ul Khyber which is the entrance to the Khyber Pass, Khyber Agency, FATA | May 27, 2006 |
 |  | Rs. 20 | 123 × 65 mm | Orange Green | Mohenjo-daro in Larkana District | March 22, 2008 |
 |  | Rs. 50 | 131 x 65 m.m. | Purple | K2, second highest mountain of the world in northern areas of Pakistan | July 08, 2008 |
 |  | Rs. 100 | 139 × 65 mm | Red | Quaid-e-Azam Residency in Ziarat | November 11, 2006 |
 |  | Rs. 500 | 147 × 65 mm | Rich Deep Green | Badshahi Masjid in Lahore | |
 |  | Rs. 1000 | 155 × 65 mm | Dark blue | Islamia College in Peshawar | February 26, 2007 |
 |  | Rs. 5000 | 163 × 65 mm | Mustard | Faisal Mosque in Islamabad | May 27, 2006 |
Exchange rate
The Rupee was pegged to the US Dollar until 1982. When the government of General Zia-ul-Haq, changed it to managed float. This has been regarded as the best decision by Zia. As a result, the rupee devalued by 38.5% between 1982/83 and 1987/88 and the anti-export bias in the economy was reduced. The Pakistani rupee depreciated against the US dollar until the turn of the century, when Pakistan's large current-account surplus pushed the value of the rupee up versus the dollar. Pakistan's central bank then stabilized by lowering interest rates and buying dollars, in order to preserve the country's export competitiveness. The year 2008 has been termed as disastrous year for the rupee as so far (up to August 2008) it has lost 23% of its value since December, 2007 to a record low of 79.2 against US Dollar. The major reasons for this depreciation are ongoing political crisis, increased current and trade accounts deficits and rising militancy in the NWFP and FATA areas.
Since the allegedly forex scam case arrests, greenback value is depreciating against ruppee. Dollar fell from 87 to 0.916 in international forex exchange and 0.9 in Pakistani Open Market.
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