A spectacular surge in oil prices took a toll on Pakistan's currency as the rupee fell further against the US dollar on Thursday, inching ever so close to its all-time low after a 0.12% fall in the inter-bank market.

As per the State Bank of Pakistan (SBP), the rupee closed at 177.83 after a day-on-day depreciation of 21 paisas or 0.12%. Its all-time low against the US dollar was recorded in December last year, when it closed at 178.24.

The decline comes as oil prices extended their rally on Thursday, as Brent charged towards $120 a barrel, its highest in almost a decade amid US sanctions targeting Russian refineries, disruptions to shipping and a fall in US crude stocks to multi-year lows.

Brent crude futures rose as high as $119.84 a barrel, the highest since May 2012. US West Texas Intermediate crude hit a high of $116.57, the loftiest since September 2008, and was at $116.41 a barrel, up $5.81, or 5.3%.

Meanwhile, Pakistan’s trade deficit continued to march upwards, widening by 22.1% on a year-on-year basis, jumping from $2.533 billion in February 2021 to $3.095 billion in February 2022, revealed the Pakistan Bureau of Statistics (PBS) data.

On a monthly basis, trade deficit narrowed by 9.6% from $3.427 billion in January 2022 to $3.095 billion in February 2022.

Giving his views on the latest trade figures, Asad Rizvi, ex-country head at Chase Manhattan, said the increase in exports helped reduce the trade deficit to $3.1 billion.

“But higher imports is a bad sign due to fewer business days in February,” said Rizvi, adding that the impact of surging oil prices will be felt next month.

“Remittances will provide a clearer picture to determine the current account position,” he said.

Meanwhile, Fahad Rauf, Head of Research at Ismail Iqbal Securities Limited, projected the upcoming remittance figures to remain flat at $2.1 billion.

“The remittances are usually lower in February due to fewer working days. Bangladesh remittances have fallen 12% MoM in February 2022,” said Rauf in a note.

“Considering Pakistan witnessed a sharp fall in January, we assume flat remittances at $2.1 billion for February 2022,” he said.