PTBP Web Desk
The Pakistani rupee recorded a notable improvement against the US dollar, appreciating by 0.07% during the opening hours of trading in the inter-bank market on Wednesday. At 10:00 am, the local currency was trading at 280.37 per US dollar, reflecting a gain of Re0.20 against the greenback. On Tuesday, the rupee had closed at 280.57.
This modest but meaningful appreciation comes as the international currency markets respond to recent economic data and changing expectations surrounding the US Federal Reserve’s monetary policy.
Internationally, the US dollar eased on Wednesday, pressured by softer-than-expected economic indicators that reinforced expectations of a possible interest rate cut in December. Investors are also factoring in the likelihood that the leading candidate for the next Federal Reserve chair may adopt a more dovish stance, further influencing currency movements.
Data released on Tuesday showed that US retail sales in September increased less than anticipated, while producer prices aligned with market expectations. Additionally, US consumer confidence weakened in November as households expressed concerns about employment and personal finances.
These developments increased market speculation of a 25-basis-point rate cut by the Fed next month, with the CME FedWatch tool indicating an 84% probability of such a move. This speculation has weighed on the US dollar, indirectly benefiting emerging market currencies like the Pakistani rupee.
The US dollar’s decline against a basket of major currencies also played a role in bolstering the rupee. Against the euro, the dollar edged lower, with the euro trading near the $1.16 mark, last recorded at $1.1583. This movement was slightly aided by reports of progress in peace talks between Russia and Ukraine.
Against a broader basket of currencies, the US dollar fell by 0.2% to 99.67, following a 0.3% decline in the previous session—the largest single-day drop in nearly three weeks. Such shifts in the global forex market have positive implications for the Pakistani rupee, providing much-needed support amid domestic economic pressures.
Oil prices, a key factor influencing currency parity, experienced a modest rebound on Wednesday after dipping to one-month lows in the prior session. Optimism over a potential peace deal between Ukraine and Russia, which could ease sanctions on Russian oil, contributed to the recovery.
Brent crude futures rose by 19 cents, or 0.3%, to $62.67 per barrel as of 0114 GMT, while US West Texas Intermediate (WTI) crude futures gained 14 cents, or 0.24%, to $58.09 per barrel. Both contracts had fallen by 89 cents on Tuesday. Ukrainian President Volodymyr Zelenskiy recently indicated that a US-backed framework for ending the war with Russia is progressing, with only minor points of disagreement remaining.
These developments in the oil market are closely monitored by currency traders, as oil price stability often contributes to a stronger balance of payments position and can support domestic currency strength, including the Pakistani rupee.
The appreciation of the rupee provides temporary relief for importers and businesses with dollar-denominated expenses. It also has implications for inflation management, as a stronger currency can reduce the cost of imported goods and raw materials.
However, economists caution that sustained stability in the PKR will depend not only on external factors but also on domestic economic reforms, consistent foreign investment inflows, and sound fiscal management. With ongoing pressures on Pakistan’s current account and external debt obligations, careful monitoring of both global and domestic developments remains crucial.
