Dollar surges 21 paisas to PKR on high oil price concerns

Dollar surges 21 paisas to PKR on high oil price concerns

KARACHI: On Wednesday, the US dollar gained 21 paisas against the Pakistani Rupee (PKR) in response to soaring international oil prices, which surpassed $113 per barrel.

The rupee concluded at Rs177.62 to the dollar, compared to the previous day’s closing rate of Rs177.41 in the interbank foreign exchange market.

The surge in international oil prices has been ongoing since Russia’s invasion of Ukraine. The Brent crude climbed to $113 per barrel amid concerns over Russian supply disruptions.

Currency experts have expressed concerns that the heightened demand for dollars to settle oil payments could further weaken the rupee.

It’s worth noting that the local currency had hit a record low at Rs178.24 against the dollar on December 29, 2021.

The import bill of the petroleum group has seen a significant increase, recording a surge of 107 percent to $11.7 billion during the first seven months of the current fiscal year compared to $5.64 billion in the corresponding months of the last fiscal year.

Moreover, the widening current account deficit and dwindling foreign exchange reserves are also contributing factors to the depreciation of the rupee.

The country’s Current Account Deficit (CAD) reached its highest ever monthly deficit of $2.6 billion in January 2022 (compared to $1.9 billion in December 2021), resulting in a CAD of $11.6 billion during the first seven months of the current fiscal year.

Pakistan’s liquid foreign exchange reserves declined by $264 million to $23.226 billion by the week ended February 18, 2022. The foreign exchange reserves stood at $23.49 billion by the week ended February 11, 2022. The official reserves of the State Bank decreased by $289 million to $16.807 billion by the week ended February 18, 2022, compared to $17.096 billion a week earlier.

The continuous fluctuations in the exchange rate and the challenges posed by the geopolitical landscape continue to impact Pakistan’s currency and economic stability. As oil prices remain a key determinant, the authorities are closely monitoring the situation to mitigate any adverse effects on the economy.