PTBP Web Desk
The Pakistani rupee experienced a marginal depreciation against the US dollar, falling by 0.03% in the inter-bank market. The currency concluded the day at 278.86 PKR per USD, marking a loss of Re0.09 from its previous closing rate of 278.77 PKR as reported by the State Bank of Pakistan (SBP). This slight decline reflects ongoing adjustments in global currency valuations, particularly influenced by recent economic indicators from the United States.
Globally, the US dollar saw a slight retreat from its recent highs. This movement was spurred by cooling inflation data from the US, which led to a decrease in bond yields. Investors, previously concerned about persistent inflation, reacted with relief, opting to buy stocks and thereby pushing benchmark 10-year Treasury yields down by more than 13 basis points. However, the currency market’s response was relatively muted compared to the equity markets.
The yen, on the other hand, experienced significant appreciation against the dollar, rising about 1% overnight and further in Asian markets. This surge was driven by both the relief from US inflation data, which increased the likelihood of Federal Reserve rate cuts, and speculations about a potential rate hike by the Bank of Japan in the near future. The yen reached as strong as 155.21 per US dollar, marking its highest level since December 19.
The weakening dollar also affected other major currencies. Both the Australian and New Zealand dollars regained some ground against the US dollar, reflecting a broader trend of dollar softening. The dollar index, which measures the greenback against a basket of major currencies, was on track for a fourth consecutive session of decline, slightly falling to 109.02. Despite these daily losses, the index has maintained a 0.5% increase for January, potentially setting the stage for four consecutive monthly gains if the trend persists.
Market sentiments are adjusting to the news of potentially lower US inflation, with traders pricing in an additional 10 basis points of Federal Reserve easing this year, now expecting a total of 37 basis points in rate cuts. This shift in expectations could have significant implications for global forex markets, including the rupee’s valuation against the dollar.
Oil prices, which often influence currency values due to their impact on trade balances, continued to rise. Brent crude futures climbed by 23 cents or 0.3% to $82.26 per barrel, following a 2.6% increase in the previous session. Similarly, US West Texas Intermediate crude futures went up by 28 cents or 0.4% to $80.32 a barrel after a 3.3% surge. These gains were supported by concerns over supply disruptions from US sanctions on Russia, a significant drop in US crude oil stocks, and an optimistic global demand outlook.
