If currency crises were rare catastrophes, one might chalk them up to bad luck. But in Pakistan’s case, they’ve become disturbingly a routine. In a research paper I and Hafsa Hina examined six major currency collapses from 1982 to 2022, to show that the results are damning: each was a predictable outcome of policy failure, macroeconomic mismanagement, and deliberate denial of structural reforms.

The data speaks clearly. In every case, the rupee collapsed, foreign exchange reserves evaporated, and Pakistan was left begging – again — for a bailout.

The Recurring Script of Ruin

From the 1960 devaluation to the post-COVID 2022 collapse, the pattern is repetitive:

1973: after fixing the rupee artificially to the dollar and introducing a bonus voucher to incentivize exports we had to devalue by over a 100%.

1982: Managed float ends in devaluation as reserves run low.

1998: Foreign currency liabilities built up for a decade and central bank was left with huge negative reserves. Nuclear tests burst the bubble.

2008: Following a decade of fixed exchange rates and low interest rates with the buildup of energy losses and faulty energy subsidies, the bubble burst.

2018:........

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