Rupee Depreciation.

Pakistan is facing a huge economic crisis due to currency depreciation which could become a worst-case scenario if not dealt with suitable economic policies. The devaluation of the Pakistani rupee in comparison to the US dollar is becoming an everlasting risk for Pakistan's economy, making the economy vulnerable. The ongoing situation is becoming a major cause of distress for the economy in terms of both micro and macro perspectives. What will be the consequences of PKR depreciation on the economy of Pakistan?

Currency depreciation is an unofficial increase in the exchange rates due to the demand and supply of currency. This happens when a country is following the floating exchange rate system. The exchange rate means the value of one currency for the purpose of conversion to another. The economic situation in Pakistan due to the rise of the US dollar is a matter of prime importance because the rupee depreciation against the dollar will have grave consequences. Nowadays, currency depreciation is one of the most prominent issues in Pakistan and it has always created severe problems for the economy of Pakistan.

There are two levels of economy, micro level, and macro level. The micro-level of the economy includes individual and business decisions, while the macro-level analyzes the decisions made by countries and governments. Micro-level focuses on supply and demand, and other forces that determine price levels, making it a bottom-up approach. Investors can use microeconomics in their investment decisions. The macro-level takes a top-down approach and looks at the economy, determining its course and nature. Macroeconomics is an analytical tool used to craft economic and fiscal policy.

There are many issues at the micro as well as the macro level of the economy which Pakistan is facing due to the increase in the exchange rates of the US dollar. The issues that Pakistan is facing at the macro level include unemployment, high-interest rates, inflation, and worsening GDP while the issues at the micro level are poverty, monopoly, and volatile prices. Pakistan is an importer of fertilizers, oil, food items, machinery, and many raw materials. In the current scenario, the prices of commodities are increasing at a greater pace due to the increase in the prices of imported goods.

The PKR depreciation will also affect the economy by increasing the cost of doing business which in turn will lower the business competitiveness in the international market...