As per the State Bank of Pakistan (SBP), the rupee closed at 177.11 after a day-on-day depreciation of 72 paisas or 0.41%. On Thursday, the local currency had depreciated 23 paisas against the dollar.

Experts say decline in the local currency is due to the jump in current account deficit amid a rising import bill. Oil prices, which are a major determinant of the rupee-dollar parity, have jumped as Russia's invasion of Ukraine stoked global supply concerns. Markets are also bracing for the potential impact of trade sanctions on major crude exporter Russia.

Meanwhile, Pakistan’s current account deficit worsened as it crossed the $11 billion mark in the first seven months of this fiscal year (FY22), mainly due to higher import bill. On a month-on-month basis, the current account deficit increased 33% in January 2022 and clocked-in at $2.55 billion as against $1.91 billion in December 2021.

“Given the rising commodity prices, we project C/A deficit to remain elevated in the coming months,” said IGI Securities in a note.

The brokerage firm stated that with limited foreign exchange inflow expected in the near-term, rising C/A deficit will put a strain on the country’s reserves, which stand at $16.81 billion for the SBP and $6.42 billion for commercial banks.

“Thus, we can expect pressure on PKR-USD parity in the near-term and bearing negative implication on domestic inflation,” it added.

Meanwhile, Malik Bostan, Chairman Exchange Companies Association of Pakistan (ECAP), told Business Recorder that Russia's invasion of Ukraine is denting confidence across the globe.

“Things are too volatile to be assessed at the moment, but we are hopeful that the Russia-Ukraine situation improves,” he said.

Inter-bank market rates for dollar on Friday

BID Rs 177

OFFER Rs 177.10

Open-market movement

In the open market, the PKR lost 20 paisas for both buying and selling against USD, closing at 177.50 and 178.50, respectively.

Against Euro, the PKR lost one rupee for buying and 1.10 rupees for selling, closing at 197.50 and 199.50, respectively.

Against UAE Dirham, the PKR lost 18 paisas for buying and 10 paisas for selling, closing at 48.60 and 49, respectively.

Against Saudi Riyal, the PKR lost 20 paisas for buying and 15 paisas for selling closing, at 46.80 and 47.20, respectively.

Open-market rates for dollar on Friday

BID Rs 177.50 OFFER Rs 178.50

This story was originally published in Business Recorder on February 25, 2022.