The movement of international oil prices will decide the fate of the rupee during the next week.
Currently, the rupee is stable, owing to the inflows received from a lending agency and the proceeds of the Sukuk bond.
The exchange rate for the week ended February 11, 2021 closed at Rs174.71 against the greenback in the interbank foreign exchange market. The rupee during the week fell, owing to a surge in the international oil prices; however it recovered the losses after ease in the global oil prices.
The benchmark Brent crude was recorded at $90.83/barrel at 4:00pm PST on February 11, 2022, falling from $94. Pakistan is a net importer of the petroleum products to feed its domestic demand.
The oil import bill surged 113.40 per cent to $10.18 billion during the first half of July-December 2021/22, compared with $4.77 billion in the same period of the last fiscal year.
Experts believe the global oil prices would further soften, owing to the expected positive outcome of the Iran-US negotiations. Previously, the oil prices fell after the US eased restrictions on Iran’s civil nuclear programme.
The rupee also remained stable during the outgoing week, owing to buildup in foreign exchange reserves.
The total liquid foreign exchange reserves of the country increased $1.637 billion to $23.721 billion by the week ended February 4, 2022 as against $22.084 billion by the week ended January 28, 2022.\
The official foreign exchange reserves of the State Bank of Pakistan climbed $1.61 billion to $17.337 billion by the week ended February 4, 2022, compared with $15.727 billion a week ago.
The SBP attributed the rise in the official foreign exchange reserves to inflows of $ 1,053 million received from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF) programme and the proceeds against Pakistan International Sukuk Bond issuance of $1 billion.
The IMF Executive Board met on February 2, 2022 and approved over $1 billion 6th tranche of the Extended Fund Facility for Pakistan. This would take the total disbursement by the IMF under the EFF programme to $3 billion to Pakistan and will support the foreign exchange reserves of the country.
Analysts said the rupee may get support from the ease in import bill. The latest number of the import bill is showing a decline over the previous month after imposition of measures introduced through the mini-budget.
The import bill in January 2022 recorded a decline of 22 per cent to $5.9 billion, compared with $7.58 billion in December 2021, according to the data released by the Pakistan Bureau of Statistics.
