Rupee decline persists, currency drops to Rs177.47

• Hefty current account deficit, surging energy and oil prices, amid Russia-Ukraine conflict weigh on the rupee.
• Rupee depreciated by 12.65% since July 1, 2021.
• Russia-Ukraine conflict presents uncertainties for Pakistan’s rupee alike for other global and regional currencies.

KARACHI: There was no respite from the declining rupee on Monday as the currency dropped to Rs177.47 against the US dollar as the hefty current account deficit, surging energy and oil prices, and volatility in financial markets amid the Russia-Ukraine conflict weighed on the domestic currency.

According to the State Bank of Pakistan (SBP), the rupee had closed at Rs177.11 on Friday.

The all-time high current account deficit of $2.5 billion amid high global oil and other commodity prices seems to be a chief worry as it is increasing the dependence on foreign loans to meet its financial requirements, especially in a situation when imports are growing at a faster pace than exports.

After posting a fresh decline of 0.20%, the Pakistani rupee has depreciated by 12.65% (or Rs19.93) 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 16.54% (or Rs25.2) to date, compared to the record high of Rs152.27 recorded in May 2021.

A currency dealer said that the foreign exchange market is concerned about the increasing pressure on the balance of payments, despite the fact that the central bank has said there is enough financing available to fund the deficit and the foreign exchange reserves are also at a comfortable level.

Besides, the Russia-Ukraine conflict presents uncertainties for Pakistan’s rupee alike for other global and regional currencies.

“We intend to take a cue for the rupee from how the government manages the current account deficit and what measures it takes to improve the current account balance,” he said, adding that investors also assessing the Russia-Ukraine situation and sanctions imposed by the US on Moscow.

“The uncertainty related to the current account and the geopolitical tension will exert pressure on the rupee in the ongoing week.”