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Markets

Against USD: New lows as rupee approaches 179 in inter-bank

  • Currency remains under pressure due to high oil prices, widening current account
Published March 14, 2022

The ongoing commodity supercycle continued to bite the Pakistani Rupee, which registered a significant fall to drop to another record low, depreciating 0.26% against the US dollar as it approached the 179 level in the inter-bank market on Monday.

As per the State Bank of Pakistan (SBP), the rupee closed at 178.98 after a day-on-day depreciation of 47 paisas, or 0.26%. This is the lowest the rupee has ever been, after hitting 178.63 on Wednesday last week.

In that week, the rupee depreciated in three of the five sessions, as volatile oil prices took a toll on the currency and it registered a cumulative 0.57% decrease. A minor gain on Friday reduced some of the weekly loss.

The Pakistani rupee has remained under pressure for several months now, with a widening current account and high import bills weakening the local currency.

Rupee stays at record low against US dollar as pressure remains

On top of that, the Russia-Ukraine conflict has pushed oil prices to multi-year highs, which has become a major headache for oil-importing countries like Pakistan and put stress on currencies worldwide.

Oil prices, which remain a major determinant of currency parity, shed as much as $4 a barrel on Monday, extending last week’s decline as diplomatic efforts to end the war in Ukraine were stepped up and the market braced for higher US rates.

Brent crude futures dropped by $3.05 or 2.7% at $109.62 a barrel, and US West Texas Intermediate (WTI) crude futures eased $3.10 or 2.8% to $106.23 a barrel.

“Uncertainty pertaining to rising commodity prices, especially oil and widening current account deficit, is taking a toll on sentiments,” Tahir Abbas, Head of Research at Arif Habib Limited, told Business Recorder.

He said that upcoming current account deficit figures for the month of February are expected to be on a higher side i.e. between $1.5-1.8 billion.

“Some quarters are expecting to be even higher and hit $2-2.5 billion,” said Abbas, adding that the exchange rate is factored in already.

He said that alongside oil prices, rates for other commodities including coal, gold, steel and cement have also shot up, creating concerns of a high import bill.

Abbas said recent measures taken by the central bank to moderate growth are showing results as the country’s non-oil import bill has come down, while “high frequency indicators are cooling off, leading to growth moderation”.

However, it is the ongoing Russia-Ukraine crisis that has pushed up commodity prices, and they will only come down if the geopolitical situation is normalised.

Inter-bank market rates for dollar on Monday

BID Rs 178.95

OFFER Rs 179.05

Open-market movement

In the open market, the PKR lost 60 paisas for both buying and selling against USD, closing at 179.40 and 180.40, respectively.

Against Euro, the PKR gained 50 paisas for both buying and selling, closing at 195 and 197, respectively.

Against UAE Dirham, the PKR lost 8 paisas for buying while remaining unchanged for selling, closing at 49 and 49.40, respectively.

Against Saudi Riyal, the PKR lost 10 paisas for buying and 5 paisas for selling, closing at 47.20 and 47.60, respectively.

Open-market rates for dollar on Monday

BID Rs 179.40

OFFER Rs 180.40

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