Market sentiment continued to take its toll on Pakistan's rupee, which recorded its second successive drop, depreciating 0.18% against the US dollar in the inter-bank market on Tuesday.
As per the State Bank of Pakistan (SBP), the rupee closed at 175.78 after a day-on-day depreciation of 31 paisas or 0.18%. On Monday, the currency had lost 76 paisas or 0.43% to finish at 175.47.
The escalation of tension between Russia and Ukraine has triggered some level of uncertainty in the market, which has already pushed oil prices over $95 a barrel, and created concerns for countries like Pakistan that battles a rising current account deficit.
“Negative sentiment persists in the market due to an uncertain geopolitical situation, amid escalation in tension between Russia and Ukraine, which has pushed oil prices as well,” Tahir Abbas, Head of Research at Arif Habib Limited (AHL), told Business Recorder.
Abbas said the ongoing crisis has created pressure both for Pakistan’s exports and imports.
“Our exports to Europe, which is one of our largest exporting partner, will be disrupted, taking a hit on our imports as well. Hike in oil prices would increase the import bill, creating balance of payment issue.”
However, oil prices eased later on Tuesday as investors scooped up profits from the previous day's rally to seven-year highs.
Meanwhile, Abbas expressed optimism that the ongoing tension between Russia and Ukraine would cool off amid reports suggesting Russia is calling for a troops pullback, and rupee would return to 173-174 level.
He added that the latest drop in remittance figures is also a concern.
Remittances from overseas workers declined 14.9% month-on-month in January 2022, amounting to $2.14 billion, said the SBP. This was the lowest monthly remittance figure since August 2020.
Inter-bank market rates for dollar on Tuesday
BID Rs 175.70
OFFER Rs 175.80
In the open market, the PKR gained 20 paisas for both buying and selling against USD, closing at 177 and 178, respectively.
Against Euro, the PKR gained one rupee for both buying and selling, closing at 199 and 201, respectively.
Against UAE Dirham, the PKR remained unchanged for both buying and selling, closing at 48.85 and 49.30, respectively.
Against Saudi Riyal, the PKR lost 10 paisas for both buying and selling closing, at 46.75 and 47.20, respectively.
Open-market rates for dollar on Tuesday
BID Rs 177
OFFER Rs 178