Pakistan's rupee lost further value against the US dollar, depreciating 0.03% to close at a new record low in the inter-bank on Friday.

As per the State Bank of Pakistan (SBP), the rupee closed at 181.78, its weakest level in history, after a day-on-day depreciation of 5 paisas. On Thursday, the local currency had remained unchanged at the then-record low of 181.73.

The rupee has lost over 16% since its most-recent high achieved in May last year. On a fiscal year to date (FYTD) basis, the local currency has depreciated over 13%.

During the week, the rupee declined in four out of five sessions, after it remained unchanged at close on Thursday.

Rupee unchanged against US dollar

Oil prices, a major determinant of currency parity, slipped on Friday, with some supply concerns easing on expectations that crude exports would resume from Kazakhstan's CPC terminal, while the European Union remained split on whether to impose an oil embargo on Russia.

Brent fell $1.56, or 1.3%, to $117.47 a barrel and U.S. West Texas Intermediate (WTI) crude slid $1.56, or 1.4%, to $110.78 a barrel, after both had dropped more than 2% the previous session.

“The rupee's fall comes as the money market expects hike in the interest rate by 100 basis points,” Tahir Abbas, Head of Research at Arif Habib Limited, told Business Recorder.

“However, we don’t believe that the interest rate would change as the inflation rate would taper down in coming months, amid prime minister relief package announced on electricity and POL rates,” he said, adding that inverted yield curves signal towards inflation and interest rates "peaking out".

The story was originally published in Business Recorder on March 25, 2022.