Why was Indian currency used in Pakistan?
15th August 1947, on this day the world got two new countries and with these two new countries, it also got the wound of partition. Everything was divided, from people to goods, the army was divided, the treasury was divided. But there was one thing which was not possible to divide. It was the printing press of currency notes. When everything was divided, Pakistan also demanded the division of this printing press but it was not practical. The press was one and the countries were two, so for a few years after the formation of Pakistan, Pakistan was forced to use the Indian currency which was printed here.
We will know how all this happened in today's article.
Before partition, currency (notes) were printed in Nasik Press of India. The British brought the press to India in 1924. After this, in 1928, for the first time, currency notes of ₹ 5 were printed in India. After this, notes of up to 10000 were printed here. After that, India and Pakistan were partitioned and this printing press also had to be divided. Pakistan demanded that the printing press should also be divided. The problem before Pakistan was that it was going to become a new country. In such a situation, it needed its own currency to run the country. India also had the same problem. After a long debate between the leaders of India and Pakistan, India put three options before Pakistan. First, the Pakistan government should get its currency printed from some other private printing press. The second option is that after 15 August i.e. after partition, Pakistan should make its own arrangements and the third option is that printing for Pakistan should continue from Nasik Press itself. It was difficult for a new country Pakistan to choose the first two options. Pakistan had to agree to the third option because it did not know where to get the new press from. A committee was formed by Pakistan. This committee inspected the Nasik printing press and put a condition before India that an officer of the Pakistan government would keep an eye on the entire process of printing notes. So that there is no scope for any kind of manipulation. But India had the problem that after partition, how could a person from another country stay in a confidential place like a note printing press. The committee presented its report to the Finance Commission on 19 July 1947, about 26 days before independence, and it also got permission for the Pakistani officer to stay at its place, i.e. in the Nasik printing press.
Now you must be thinking that the problem has been solved, but the real problem had just started. Pakistan got permission to print notes from the Nasik printing press, but the problem was not just about printing notes. There was also a problem of note design. It took at least one and a half years from designing a new note to completing the printing in the Nasik printing press. But Pakistan did not have that much time. In such a situation, it was decided that the Reserve Bank of India would issue notes for both India and Pakistan. Initially, Pakistan was reluctant but due to no other option, it had to accept it. In the museum of the State Bank of Pakistan, a picture of 10 rupees and 100 rupees is shown as the first currency of Pakistan. It is written along with it that at the time of partition of India in 1947, the Reserve Bank of India was working as the central bank of undivided India. Since it was not possible to establish a separate central bank in Pakistan immediately after the partition, emergency arrangements were made to run the currency in Pakistan. The Governor General of India before partition issued the Pakistan Monetary System and Reserve Bank Order, 1947 on 14 August 1947. Under this order, the Reserve Bank of India had to issue currency for India and Pakistan till 30 September 1948.
After independence, the Indian government also had to make an agreement. That is, the currency note used in India before independence had the picture of the King of England on it. The same notes were issued by the Reserve Bank of India. Since new notes could not be designed so soon, notes with the king's picture continued to be used in India for some time. But the signature of the then RBI Governor CD Deshmukh started appearing on them. This agreement was a big one for Pakistan because firstly, Reserve Bank of India was written in big letters on the note and secondly, there was also the signature of an Indian Governor.
To reduce the grief of this agreement, the Pakistani government started printing Government of Pakistan in English on the white portion of the notes and Hukumat Pakistan in Urdu below. This made it clear that this currency belonged to Pakistan. The Reserve Bank of India issued the first consignment for Pakistan on 1 April 1948 and this currency continued to be used in Pakistan for many years. The information that is available in the media from the Pakistani government shows that these changes. Hukumat Pakistan was written on them. They were done on the printing plates itself, they were not overprinted, meaning they were not printed again after printing. The livelihood of the government and people of Pakistan was sustained with the help of this currency. For some time, Pakistani citizens used to make purchases and transactions with these Indian notes. In 1949, almost two years after independence, Pakistan started printing its own currency in its country. The value of the currencies of the two countries which got independence on the same day is not the same today. The value of Pakistani Rupee is very weak in comparison to the Indian Rupee.
What is the reason for this, let's take a look at this as well
The Pakistani rupee was initially linked to the British pound sterling. In 1949, the pound was devalued, which means that when the value of the currency of a country goes down, we call it devaluation. The pound was also devalued. Its value was reduced, due to which the value of the Pakistani rupee also fell. In 1961, the Pakistani rupee was decimalised and 100 paise, i.e. 1 rupee, replaced 16 anna. After this, in 1971, East Pakistan separated and became Bangladesh and in 1972, independent Bangladesh introduced the Taka currency equal to the Pakistani rupee. Here too, the Pakistani currency suffered a setback, but the biggest setback was yet to come. The value of the Pakistani currency was falling continuously, but in 1982, the value of the currency fell sharply. Till 1982, the Pakistani rupee was linked to the British pound. In the same year, the government of the then Governor General of Pakistan, Zia-ul-Haq, changed it into a managed float. In simple terms, you can understand managed float as a system in which the value of a country's currency is decided by the foreign exchange market as to at what price it is being traded. On the basis of the consumption and demand of this currency in comparison to other currencies. The way the dollar is traded means that the value of the currency is neither completely free nor completely stable. After the managed float system, the Pakistani rupee depreciated by 38.5 percent between 1982-83 and 1987-88.
Just imagine, 40 rupees out of 100 rupees were gone. The cost of import of raw materials increased rapidly. Due to which there was pressure on Pakistani finances and their finances. By the end of the century, the Pakistani rupee kept weakening against the US dollar. To stop the falling value of the Pakistani rupee, the State Bank of Pakistan had to reduce interest rates and to stop the falling value of the currency, it also bought US dollars. The global financial crisis that came in 2008, the Global Financial Crisis. During that period, the Pakistani rupee also fell like the currencies of other countries. In 2008, it fell by more than 20 percent against the US dollar. This decline continued and continues even today.
The Pakistani rupee continued to fall gradually till the beginning of 2018 and the decline worsened in mid-2021. Between 2021 and 2023, the value of the Pakistani rupee almost halved. The main reason for this was said to be political instability, devastating floods and the imposed curse. You may have another question in your mind that how much is the value of Pakistani rupee in comparison to India. The answer to this question changes with each day. We are telling as per 18 October 2024. The Indian rupee is quite strong compared to Pakistan. Today ₹ 1 of India is equal to ₹ 3.30 paise of Pakistan. This value can also increase or decrease. At the time of writing this article, this was all. Another interesting thing is that a 5000 note is also used in Pakistan. According to the information given on the official website of the State Bank of Pakistan, the currency notes in circulation are 5 rupees, 10 rupees, 20 rupees, 50 rupees, 75 rupees, 100 rupees, 500 rupees, 1000 rupees and 5000 rupees. Like India, pictures of different historical places have been engraved on the currency notes of Pakistan. For example, the picture of Peshawar's Khyber Pass is on the 10 rupee note, Mohenjodaro is on the 20 rupee note, Karakoram Peak is on the 50 rupee note and the picture of Islamabad's Faisal Mosque is on the 5000 rupee note.
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