Rupee decline persists, currency drops to Rs175.78

• Decline comes on the back of uncertainty in geopolitical conditions and rising oil prices.
• Rupee has depreciated by 11.57% since July 1, 2021.
• AHL analyst predicts local unit to consolidate on this level in the near term.

KARACHI: There was no respite from the declining rupee on Tuesday as the currency dropped to Rs175.78 against the US dollar on the back of uncertainty in geopolitical conditions and rising oil prices.

According to the State Bank of Pakistan (SBP), the rupee had closed at Rs175.47 on Monday.

Speaking to Geo.tv, Arif Habib Limited's Head of Research Tahir Abbas said that local currency is under pressure due to two major reasons — geopolitical conditions and rising oil prices.

“Acceleration in international geopolitical tensions over the Ukrainian triggered unrest in the local currency market as the traders fear a decline in exports if Russia invades Ukraine,” he said.

Shedding light on the second reason, he said that the traders also fear an increase in import payments as oil prices in the international market surged to a seven-year high recently.

With the fresh decline of 0.18%, the Pakistani rupee has depreciated by 11.57% (or Rs18.24) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.

The rupee had maintained a downward trend for the past nine months. It has lost 15.43% (or Rs23.51) to date, compared to the record high of Rs152.27 recorded in May 2021.

The analyst was of the view that currency dealers are keeping a close eye on the developments on the aforementioned fronts, predicting the local unit will consolidate on this level in the near term.

It is pertinent to mention here that on December 29, 2021 the rupee hit an all-time low of Rs178.24 against the greenback.

“The rupee seems to be stuck in a range-bound trade unless domestic or global events flare-up. We expect the rupee to remain around current levels in the coming days,” a foreign exchange dealer said.

“The dollar demand from importers, especially for energy imports given the spike in oil prices, will be a key driver for the rupee’s future direction,” he added.

Earlier, Pakistan-Kuwait Investment Company's Head of Research and Development Samiullah Tariq had said: “Rupee is in correction mode.” Tariq had predicted that the Pakistani currency should trade in the range of Rs174-176.