PTBP Web Desk
Rupee demonstrated resilience in the inter-bank market on Wednesday, recording a marginal appreciation of 0.01% against the US dollar. As of 10:30 am, the currency stood at 278.25, reflecting a slight gain of Re0.02 compared to the previous day’s close of 278.27, according to data from the State Bank of Pakistan (SBP).
This stability is a positive indicator of Pakistan’s currency market, which has experienced volatility in recent months due to fluctuating economic conditions and global financial pressures.
Internationally, the US dollar held firm against major currencies, including the yen, as investors awaited the conclusion of the Federal Reserve’s two-day policy meeting on Wednesday. The Fed is widely anticipated to announce a 25-basis-point interest rate cut, with market estimates showing a 97% probability of this decision, according to the CME’s FedWatch tool.
The focus of global markets lies not only on the expected rate cut but also on the Federal Reserve’s updated economic projections for the coming year. Analysts speculate that the Fed may signal a more cautious approach to further rate reductions, potentially revising the forecast for 2025 from four rate cuts to three.
Tony Sycamore, a market analyst at IG, highlighted in a client note that robust inflation and economic activity data might influence the Fed’s stance. The anticipated slower pace of rate cuts could shape investor expectations for 2025 and beyond.
Additionally, market participants are monitoring the potential effects of promised tariffs and tax cuts by the incoming Trump administration, which could significantly impact the Federal Reserve’s future policy decisions.
The US Dollar Index (DXY), which gauges the performance of the dollar against a basket of six major currencies, saw minimal movement. It was down by 0.04% at 106.89, following its recent peak of 107.18, the highest level since late November.
Oil prices, a key determinant of global currency parity, traded within a narrow range early on Wednesday. Brent crude futures edged up by 12 cents (0.16%) to $73.31 per barrel, while US West Texas Intermediate (WTI) crude rose by 11 cents (0.16%) to $70.19 per barrel.
The oil market’s cautious movements reflect investor sentiments ahead of the Federal Reserve’s rate decision, as any changes in US monetary policy could ripple through global energy markets.
The rupee’s stability against the dollar, coupled with steady global oil prices, provides Pakistan with an opportunity to navigate economic challenges effectively. Currency stability is crucial for maintaining investor confidence, supporting trade, and ensuring manageable import costs, especially for a country reliant on energy imports.
In the broader economic context, Pakistan continues to focus on policy reforms to bolster its fiscal position and attract foreign investments. The recent rupee stabilization, while modest, is a step toward building a stronger financial framework.
