Rising oil prices pushed the Pakistani rupee over the 180 level for the first time against the US dollar, as the local currency depreciated 0.35% in the inter-bank market on Thursday.

As per the State Bank of Pakistan (SBP), the rupee closed at 180.07 after a day-on-day depreciation of 23 paisas. This is the lowest the rupee has ever been, after it hit 179.44 on Wednesday, amid the ongoing Russia-Ukraine conflict.

The local currency, facing a widening current account and high import bills, has devalued by over 12.5% during the current fiscal year, and by 15.4% since its most-recent high, achieved on 14 May 2021.

Rupee hits another record low against US dollar amid geopolitical tensions

This comes as oil prices, a major determinant of currency parity, climbed on Thursday after the International Energy Agency said markets could lose three million barrels per day (BPD) of Russian crude and refined products from April.

"Surging energy and other commodity prices, along with financial and oil sanctions against Russia, are expected to depress world GDP and oil demand," it said in a recent report.

Benchmark Brent crude futures gained $1.8, or 1.9%, to $99.86, after falling for three consecutive trading sessions, and US West Texas Intermediate (WTI) crude was up $1.6, or 1.7%, to $96.67 a barrel.

Talking to Business Recorder, Saad Khan, Head of Research at IGI Securities, expressed concern over the rise in import bill amid the oil price hike, which has dented market sentiments. “The expected import bill for the month of March is expected to be over $7 billion,” he said.

“The overall petroleum imports have doubled in FY22 to $13 billion, of which $1.25bn came in the month of February alone, out of $5.9bn totals imports,” said Khan.

He said that the effective rate of crude in February was around $82 per barrel, which has increased considerably since then. “With similar imports quantity this time around in March, the POL bill is expected to cross $1.5-1.6 billion,” he said.

“Other chemicals and minerals imports will further push the import bill up,” said Khan.

This story was first published in Business Recorder on March 17, 2022.