Pakistan's cheap rupee paradox

Express Tribune published an opinion piece that starts from The Economist's July 2026 Big Mac Index, which values the rupee 37.5% below the dollar on a raw basis, up from 36.9% in January 2026. Once adjusted for GDP per capita, the undervaluation shrinks to 19%. The writer treats the distance between those two readings as the central puzzle.

The writer explains that low incomes push down wages and other non-tradable costs, so raw price gaps overstate the discount, yet a 19% undervaluation still survives that adjustment. Other Asian economies have used cheap currencies to win export competitiveness, while Pakistan has absorbed higher inflation and weaker purchasing power without that gain. Weak traded-goods output, unreliable power, costly industrial electricity and a high policy rate blunt any export edge, and investment sits at around 13-15% of GDP compared with 25-35% in Vietnam.

The piece contrasts this with Turkiye, where inflation has run ahead of lira depreciation, leaving its Big Mac price 11.1% above the dollar and erasing the discount. The writer argues that devaluation cannot substitute for structural reform, and that until the circular debt, tax base and export manufacturing issues are tackled, a cheap rupee remains a sign of fragility rather than a trade tool.