Rupee recovers 25 paisas on declining oil prices

KARACHI: The rupee gained 25 paisas against the dollar on Friday after falling for the last three days, owing to a surge in the international oil prices.

The exchange rate ended at Rs176.24 to the dollar from the previous day’s closing of Rs176.49 in the interbank foreign exchange market.

The dealers said that the prices of oil fell on Friday, after rising to seven-year highs this week, as investors took profits after a build in US crude and fuel inventories. The benchmark Brent oil was trading $88.38 per barrel at the closing of the market on Thursday.

The local currency recovered in the market as the banks received inflows in the shape of export receipts and workers’ remittances, they added.

The local unit also appreciated, owing to the measures taken by the State Bank of Pakistan (SBP) regarding restrictions on realising of export receipts.

On January 5, 2022, the SBP directed the exporters to realise their export receipts within 120 days from the date of shipment instead of 150 days, they said.

Further, the implementation of import restrictions through the mini-budget resulted in the rupee appreciation. The government on December 30, 2021 introduced the bill to meet one of the conditions of the International Monetary Fund (IMF) for approval of the next tranche of over $1 billion.

Following the passage of the bill by the National Assembly on January 13, 2022, the president also granted ascent to the bill to make it effective.

The rising oil prices may weaken the rupee value in the coming days, as Pakistan is the net importer of petroleum products to meet domestic energy demands.

The country’s oil bill sharply increased by 113.39 per cent to $10.18 billion during the first half (July-December) 2021/22, as compared with $4.77 billion in the corresponding half of the last fiscal year.

The local currency remained under pressure since the start of the current fiscal year due to higher external payments. The rupee fell 18.70, or 11.84 per cent, from Rs157.54 to the dollar on June 30, 2021 to Rs176.24 on January 21, 2022.

The rupee hit an all-time low of Rs178.24 on December 29, 2021.

In the open market, the buying and selling of the dollar was recorded at Rs176.95/Rs178.15 at 4:00pm PST.