KARACHI: The Pakistani rupee remained almost flat on Tuesday, despite the widening of conflict in the Middle East, which sparked a sharp jump in oil prices and raised concerns about the country’s trade deficit.
The rupee closed at 279.45 against the dollar in the interbank market, only slightly changed from its previous close of 279.46. In the open market, the local currency also held steady, closing at 280.5 against the dollar, unchanged from the prior session.
Over the weekend, the US and Israel launched strikes on Iran, resulting in the death of Iran’s supreme leader and plunging the Middle East into a new conflict.Oil prices surged as markets anticipate a prolonged conflict in the Middle East, with fears of supply disruptions beginning to materialise. The international benchmark, Brent crude, jumped 8.36 per cent to $84.24.
Analysts said that Pakistan’s macroeconomic fundamentals remain strong. Inflation has eased into single digits, the policy rate stands at 10.5 per cent, foreign exchange reserves are stable, and the current account remains manageable under the ongoing International Monetary Fund’s loan programme. However, if tensions in the Middle East continue or if there are disruptions in the Strait of Hormuz, prices could rise to between $90 and $100 per barrel. For Pakistan, which relies on imports for nearly 90 per cent of its crude oil, even a $10 to $20 increase in oil prices could add $1.5-$3 billion annually to the import bill.
