Currency Devaluation in Pakistan
Currency Devaluation in Pakistan- Causes, Impacts and Suggestions
Starting from the currency, it is a unit of exchange, which is in the form of money and allows you to facilitate the transfers of goods and services. And devaluation means, a reduction in the value of a specific currency with respect to some other monetary units. Devaluation is derived from the word de-value which is usually considered a means of correcting a deficit in the balance of payments. In simple words, it means to decrease the value of a nation’s currency with respect to the price of gold or currencies of other nation. So, according to this definition, devaluation of a currency occurs in terms of all other currencies, but it can be easily understood when compared with only one other currency. Like in Pakistan, we always elaborate our currency devaluation in terms of the US dollar. It is not a new phenomenon but is there for ages, early currencies were usually in the form of gold or silver coins and whenever the government was short of money or metals, they abruptly decrease the weight of coins, but today’s modern age of flat currencies does not come with any significant inherent value, and their value is maintained by a fixed exchange rate policy against the US dollar or other major currencies in the world.
In the earlier days, devaluation of currency was a matter of prestige, however, with the passage of time, it was learnt that such an operation sometimes becomes mandatory to save the country from economic hardships. Today, there are plenty of experts who believe that sometimes it is in the best interests of a country’s economy that they should lower the value of their currency. And the fact is that it does help because a weaker currency boosts manufacturing and production, thus uplifting the employment ratio, but that does not mean that a lower currency will boost the economy. It helps the economy to keep on going, but what if you the government keeps on lowering the price of rupee
Starting from the currency, it is a unit of exchange, which is in the form of money and allows you to facilitate the transfers of goods and services. And devaluation means, a reduction in the value of a specific currency with respect to some other monetary units. Devaluation is derived from the word de-value which is usually considered a means of correcting a deficit in the balance of payments. In simple words, it means to decrease the value of a nation’s currency with respect to the price of gold or currencies of other nation. So, according to this definition, devaluation of a currency occurs in terms of all other currencies, but it can be easily understood when compared with only one other currency. Like in Pakistan, we always elaborate our currency devaluation in terms of the US dollar. It is not a new phenomenon but is there for ages, early currencies were usually in the form of gold or silver coins and whenever the government was short of money or metals, they abruptly decrease the weight of coins, but today’s modern age of flat currencies does not come with any significant inherent value, and their value is maintained by a fixed exchange rate policy against the US dollar or other major currencies in the world.
In the earlier days, devaluation of currency was a matter of prestige, however, with the passage of time, it was learnt that such an operation sometimes becomes mandatory to save the country from economic hardships. Today, there are plenty of experts who believe that sometimes it is in the best interests of a country’s economy that they should lower the value of their currency. And the fact is that it does help because a weaker currency boosts manufacturing and production, thus uplifting the employment ratio, but that does not mean that a lower currency will boost the economy. It helps the economy to keep on going, but what if you the government keeps on lowering the price of rupee