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The Pakistani rupee continued its downward trajectory, as it settled on another record low against the US dollar, depreciating 0.01% in the inter-bank market on Wednesday.

As per the State Bank of Pakistan (SBP), the rupee closed at 178.63 after a day-on-day depreciation of two paisas or 0.01%. This is the lowest closing level of the rupee in the inter-bank, after it closed at 178.61 against the USD on Tuesday.

Oil prices, which are a major determinant to the currency parity, rose on Wednesday as a US ban on Russian oil imports and Britain's plan to phase them out by year-end raised concerns of tighter global supply.

Pakistan rupee falls to historic low against US dollar

Brent crude futures were up $2.17, or 1.7%, at $130.15 a barrel, after jumping 3.9% the previous day. US West Texas Intermediate (WTI) crude futures were up $1.57, or 1.3%, at $125.27 a barrel, after surging 3.6% on Tuesday.

Oil prices have surged since Russia, the world’s second-largest crude exporter, launched what it called a “special operation” in Ukraine last month.

“The rupee has hit its all-time low and will remain under pressure, owing to Ukraine-Russia issues, which have lead to an oil price hike and a spike in other commodities in the international market,” Malik Bostan, Chairman Exchange Companies Association of Pakistan told Business Recorder.

“Currencies all over the world are under pressure, which is being reflected locally as well,” he said, while expressing hopes that reported talks of negotiations between Russia and Ukraine would be succesful.

He said that oil prices have jumped 30% in a span of days, which will add to the country's import bill. “Pakistan oil imports stand at $2 billion, which will rise to $2.5-2.6 billion amid a hike of $600 million,” said Bostan.

“The situation remains critical on both domestic and international fronts,” he said.

Bostan added that political noise on the domestic end is also irking sentiments among investors, referring to the opposition filing a no-confidence motion against Prime Minister Imran Khan.

The story was originally published in Business Recorder on March 9, 2022.