The Pakistani rupee registered a slight appreciation against the US dollar during intra-day trading on Monday, reflecting the ongoing currency volatility both locally and globally. As of 10:20 AM, the rupee stood at 281.02 in the inter-bank market, marking a marginal gain of 0.01% or Re0.04 compared to the previous close.
This small uptick comes after a week where the rupee saw a slight depreciation, closing at Rs281.06 on Friday, down by Re0.09 or 0.03% compared to Rs280.97 a week earlier. The State Bank of Pakistan (SBP) has consistently been monitoring the foreign exchange trends as they remain a vital indicator of macroeconomic stability, trade viability, and investor sentiment.
The rupee’s modest intra-day recovery reflects subtle movements in regional and global markets, where the US dollar has been struggling to retain gains despite favorable domestic data. Globally, the dollar slipped slightly on Monday, as traders remained cautious amid a mix of macroeconomic signals and subdued trading volumes due to holidays in major Asian markets like Japan and China.
The recently released US March payrolls report provided temporary support for the greenback, pushing back expectations of an imminent interest rate cut by the Federal Reserve. Following this report, market sentiment shifted, with the probability of a Fed rate cut in June falling from 64% to 37%, according to interest rate futures data. Major financial institutions, including Goldman Sachs and Barclays, revised their projections, now anticipating a potential cut in July rather than June.
Despite this shift in outlook, the US dollar could not sustain momentum. Against the Japanese yen, the dollar fell by 0.2% to 144.63, moving away from Friday’s high of around 145.91. Weaker Asian market activity contributed to a lower volume of currency trading, which may have also impacted the greenback’s ability to build on recent gains.
Meanwhile, oil markets – a critical driver of currency movements for energy-importing countries like Pakistan – witnessed notable losses. Brent crude futures dropped by $2.04 per barrel (3.33%) to $59.25, while US West Texas Intermediate crude fell $2.10 (3.60%) to $56.19 per barrel. This marked the lowest point for both contracts since April 9. The decline was triggered by an OPEC+ agreement to further accelerate oil production, with a planned increase of 411,000 barrels per day in June. The move raised concerns about an oversupply, contributing to downward pressure on oil prices.
In the broader context, currency markets remain influenced by geopolitical dynamics, interest rate speculation, and commodity prices. The recent speculation surrounding potential US pressure on Asian economies to strengthen their currencies has already impacted regional performance, with Taiwan’s dollar surging over 5% last Friday.
For Pakistan, the rupee’s performance in the coming days will likely hinge on several interconnected factors – including global monetary policy signals, foreign investment inflows, remittance levels, and energy price stability. While the current marginal gain offers some relief, the outlook remains uncertain amid ongoing volatility in the international economic environment.
As the week progresses, traders and analysts will keep a close watch on SBP’s interventions, fiscal policy cues, and any emerging geopolitical developments that could influence currency demand and exchange rate trends.