Rupee Plummets as Global Oil Prices Come Close to Highest Level in Years

The Pakistani Rupee (PKR) reversed gains against the US Dollar (USD) and posted losses in the interbank market today. It lost 48 paisas against the greenback after hitting an intra-day low of Rs. 176.3 against the USD during today’s open market session.

It depreciated by 0.27 percent against the USD and closed at Rs. 176.23 today after gaining 11 paisas and closing at 175.75 in the interbank market on Monday, 21 February.

The rupee closed in red against the dollar today after oil prices hit their highest since 2014 on Tuesday (today) as tensions between Russia and Ukraine escalated, adding to supply concerns that are pushing prices to near $100 a barrel. Reuters reported that Brent crude, the global benchmark, was up $3.38, or 3.5 percent, at $98.77 at 1000 GMT, having earlier reached $99.50, the highest since September 2014.

The Russia-Ukraine crisis has added substantial support to an oil market that has soared due to constrained supplies as demand recovers from the pandemic.

Discussing the local unit’s performance in a tweet earlier today, the former treasury head of Chase Manhattan Bank, Asad Rizvi, remarked, “Since NYK was closed yesterday due to Washington’s Birthday, banks won’t receive funds in their NOSTRO a/c. This means increase[ed] demand from customers could add pressure on [the] PKR as activity was thin on MONDAY, but possibly after [a] weak opening, [the] market could recover by closing”.

The PKR reversed gains against some of the other major currencies and reported losses in the interbank currency market today. It lost 13 paisas against both the Saudi Riyal (SAR) and the UAE Dirham (AED), and nine paisas against the Canadian Dollar (CAD).

Conversely, the PKR gained three paisas against the Australian Dollar (AUD), 43 against the Pound Sterling (GBP), and 94 paisas against the Euro (EUR) in today’s interbank currency market.