KARACHI: Pakistani rupee depreciated by 72 paisas (-0.41 percent) against the US dollar for the second straight day as commodity prices surged globally on the back of Russia-Ukraine conflict. The State Bank of Pakistan said in a statement on Friday that the dollar opened at Rs176.39 in the interbank market and closed at Rs177.11. The rupee witnessed a trading range of 92 paisas during the session, showing the intraday high bid of 177.30 and low offer of 176.85. Within the open market, the rupee was traded at 177.50/178.50 per dollar against 176.70/177.60 per dollar a day earlier. On the other hand, the US Dollar Index (DXY), which gauges the greenback against a basket of its main competitors, traded without a clear direction around the 97.00 neighbourhood. TLTP
Following new cycle highs near 97.80 on Thursday, the index sparked a corrective downside and struggled for direction in the 97.00 zone on Friday. The US yields traded with modest losses after managing to erode previous day losses on the back of increasing inflows to safer assets like bonds.
Overall, the rupee shed Rs1.25 against the American currency during the last five days of this week, while it has depreciated by Rs19.68 during the ongoing fiscal year 2021-22 and 60 paisas during the current year 2022.
The currency dealers said that the surging trend in the global crude oil prices will keep the rupee under pressure, as the deteriorating situation between Russia and Ukraine has badly hit the currency markets. They said the rupee is bearing the brunt of increasing trade deficit, surging import bill due to rise in oil prices, shrinking reserves, and speculative elements. The oil import bill recorded a sharp increase in the first seven months (July-January) of 2021-22 from a year ago owing to rising prices on the international market and massive depreciation of the rupee. The oil import bill surged 107.35 percent to $11.7 billion in the first seven months of the current fiscal year.
Moreover, the sharp decline in the value of PKR is primarily attributable to the deteriorating current account balance owing to the increase in imports as the current account deficit (CAD) rose to $2.6 billion in January 2022 from $1.9bn in December 2021. In addition, the shrinking foreign exchange reserves have also played their due role to put pressure on the local unit as the total liquid foreign exchange reserves dropped to $23.23 billion.
