Volatility on the political front, rising oil prices, and reports of outflow from the local market contributed to additional pressure on Pakistan's rupee that registered yet another record low against the US dollar after depreciating 0.16% in the inter-bank on Wednesday.

As per the State Bank of Pakistan (SBP), the rupee closed at 182.64, its weakest level in history, after a day-on-day depreciation of 30 paisas. On Tuesday, the local currency had dropped to 182.34 against the greenback.

The rupee has lost nearly 17% since its most-recent high achieved in May last year. On a fiscal year to date (FYTD) basis, the local currency has depreciated by over 13.6%.

Oil prices, a key factor of currency parity, clawed back heavy losses to rise more than 2% on Wednesday on supply tightness and the growing prospect of new Western sanctions against Russia even as signs of progress emerged from peace talks between Moscow and Kyiv.

Brent crude futures were up $2.6, or 2.4% at $112, reversing a 2% loss in the previous session. US West Texas Intermediate (WTI) crude futures rose $2.7, or 2.5%, to $106.84 a barrel.

As per Special Convertible Rupee Accounts (SCRA) data issued by the State Bank of Pakistan (SBP), foreign investors pulled out $396.81 million in the month of March.

The equity market witnessed outflow of $59.478 million and inflow of $29.290 million from March 1 till 28. Meanwhile, no inflows were seen in treasury bills during the period; however, the country witnessed an outflow of $100.446 million in T-bills. An outflow of $266.33 million in PIBs outflow was seen during the month of March, as compared to an inflow of $153,000.

Another market expert said the negative trend of the rupee would persist amid dollar outflow and reserves depletion, and could push its level towards 190 against the US dollar.

This story was first published in Business Recorder on March 30, 2022.