Taking cue from a downturn in international oil prices, Pakistani currency maintained its upward trend for the seventh consecutive working day on Wednesday, appreciating to slightly above Rs284 against the US dollar in the inter-bank market.
According to State Bank of Pakistan’s (SBP) data, the rupee gained 0.08%, or Rs0.24, and closed at Rs284.14 against the greenback.
The latest uptick came after Saudi Arabia slashed the price of its flagship Arab Light crude for Asian buyers by $0.50 per barrel for January. This is the first reduction in seven months.
In addition, the price of international oil benchmark – Brent crude – came significantly down to below $76 per barrel in the wake of a slowdown in the world’s second largest economy, China.
Latest: Rupee continues to appreciate
The development stands positive for Pakistani rupee because the country heavily relies on imported energy supplies and meets about 70% of needs through imports. The share of energy is calculated at 25% in total imports at around $4 billion per month.
Market talk suggests that the inflow of US dollars has remained high these days, which stems from higher export earnings and workers’ remittances. Keeping this in view, the current account balance is expected to record a surplus for November 2023.
A slowdown in global demand has pushed world economy to the verge of recession, providing some relief to countries, like Pakistan, facing a soaring inflation. The low oil prices will not only reduce the cost of imports, but also bring down inflation in major oil importing nations.
Published in The Express Tribune, December 7th, 2023.
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