Petroleum Prices Expected to Decline as Rupee Recovers Against Dollar

Petroleum prices are anticipated to decline offering relief to consumers as the local currency continues its recovery against the US dollar. Interim Information Minister Murtaza Solangi made this announcement during a press conference held at the Karachi Press Club on Saturday.

Solangi attributed this development to the recent strengthening of the Pakistani rupee, which has gained Rs. 30 to Rs. 35 against the US dollar. This surge in the rupee’s value is a result of a crackdown against black market dealers and smugglers by the interim government over the past few days.

The military-backed crackdown against hoarders, currency smugglers, and black market dealers was initiated after the rupee plummeted to a historic low of Rs. 308 in the interbank market and exceeded Rs. 330 in the open market earlier in the month.

The rupee has now rebounded to 291.76 per dollar in the interbank market, reaching its highest level since 5 September. It has appreciated by Rs. 15 since then, thanks to increased dollar inflows from exporters, remittances, and the central bank’s efforts to promote legal channels for foreign exchange transactions.

The minister emphasized that while the interim government doesn’t control fuel prices, the reduction in oil prices is a consequence of the strengthening rupee, and it will provide a welcome relief to the people. In the previous fuel price revision on September 16, petrol and diesel prices reached historic highs, causing concern among consumers. Currently, petrol is priced at Rs. 331.1 per liter, while high-speed diesel is available at Rs. 329.19 per liter.

Additionally, Malik Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP), expressed optimism that the government’s crackdown on currency-related malpractices would further bolster the rupee’s position, potentially bringing it below Rs. 250 per dollar. Bostan also revealed that the crackdown had exposed illicit collaborations between black market operators and banking personnel, leading to illegal dollar trading through hawala/hundi channels.