As per the State Bank of Pakistan (SBP), the rupee closed at 175.86 after a day-on-day depreciation of 47 paisas or 0.27%.

The decline in local currency comes as oil prices remained high amid geopolitical volatility, pushing crude well above $90 per barrel. Oil prices retreated on Friday as the prospect of extra supply from Iran returning to the market outweighed fears of a possible Russian invasion of Ukraine, which could disrupt supply.

However, despite the drop, Brent crude futures traded at $92.29 a barrel, while US West Texas Intermediate (WTI) crude futures shed 67 cents, or 0.7%, to $91.09 a barrel.

A rising import bill amid surge in oil prices is also taking a toll on the country’s exchange reserves, which recorded a decline of $231 million during the last week, said Asad Rizvi, former treasury head at Chase Manhattan.

"Despite recent inflows, pressure has not subsided due to higher import bill. Surging oil prices is adding to the woes in shape of Rs/$ mismatch that has created a gap keeping the rupee under pressure,” said Asad Rizvi.

According to the SBP weekly report, total liquid foreign exchange reserves held by the country stood at $23.49 billion as of February 11, 2022 compared to $23.72 billion.

This report was first published in Business Recorder on February 18, 2022.