The Pakistani Rupee continued to register new record lows, after depreciating 0.12% against the US dollar in the inter-bank market on Wednesday.

As per the State Bank of Pakistan (SBP), the rupee closed at 179.44 after a day-on-day depreciation of 22 paisas. This is the lowest the rupee has ever been, after it hit 179.22 on Tuesday, amid the ongoing Russia-Ukraine conflict.

A widening current account and high import bills have weakened the Pakistani Rupee in recent months. The local currency has devalued by over 12.2% during the current fiscal year, and by 15.1% since its most-recent high, achieved on 14 May, 2021.

Meanwhile, oil prices, a major determinant of currency parity, hiked as much as $3 on Wednesday, bouncing back after earlier declines. Russia’s invasion of Ukraine continued to stoke volatile trading, with the latest market trigger being ceasefire talks.

Brent futures were last up $2.64, or 2.6%, at $102.55 a barrel, and US West Texas Intermediate (WTI) crude rose $1.91, or 2%, to stand at $98.35 a barrel.

“Pressure due to spike in oil prices amid international tensions has irked investors, which are concerned about the rise in import bill and trade deficit,” Abdullah Umer, research analyst at Ismail Iqbal Securities Limited, told Business Recorder.

Petroleum group imports witnessed an increase of 100.78% as they reached a historic high of $12.941 billion in July-February 2021-22, the highest in history as compared to $6.445 billion during the same period of the last fiscal year.

On a year-on-year basis, oil imports were up 54.74% in February 2022, compared to $804.85 million during the same month last year.

Umer expressed concern over the fact that the oil import bill is expected to rise. The last bill came when oil was being traded at $82-$85 per barrel, but the price has gone up considerably since then, even hitting $130 per barrel at one point.

He was of the view that in the short term, the government could adopt measures of energy rationing to curb oil imports. “However, the situation would only improve when the prices of commodities come down,” he said.

“In the short term, the rupee will remain under pressure due to rising imports and uncertainty pertaining to International Monetary Fund (IMF) negotiations, which has led to speculation among the investors,” said Umer.

Inter-bank market rates for dollar on Wednesday

BID Rs 179.35

OFFER Rs 179.45

Open-market movement

In the open market, the PKR lost 20 paisas for both buying and selling against USD, closing at 179.70 and 180.70, respectively.

Against Euro, the PKR gained 10 paisas for buying and 50 paisas for selling, closing at 196 and 197.50, respectively.

Against UAE Dirham, the PKR lost 8 paisas for buying while gaining 10 paisas for selling, closing at 49 and 49.30, respectively.

Against Saudi Riyal, the PKR lost 5 paisas for buying while gaining 10 paisas for selling, closing at 47.30 and 47.60, respectively.

Open-market rates for dollar on Wednesday

BID Rs 179.70

OFFER Rs 180.70

This article was first published in Business Recorder on March 16, 2022.