Declining currency – a crisis?

According to FT

Pakistan’s economic crisis deepened on Monday after the rupee sank to an all-time low and Standard & Poor’s, the global rating agency, downgraded the rating on the country’s sovereign debt to CCC-plus – a few notches above default level.

But should we use depreciating currency value as a barometer of economic crisis. Rupee has declined more than 20% against USD over the period of a year

PKR US

But the Rupee is not the only currency declining. Here is a graph of GBP against USD for the same period

GBP to US

A decline of more than 15%. If we plot USD against JPY, USD has declined by more than 20%. But do you see anybody mentioning the same in the current crisis.

US to JPY

Though I am not denying that we are in crisis. Only we should be aware of the statistics and ratings thrown up by the press to sensationalize the news.

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