The Pakistani rupee recorded a slight decline against the US dollar in the inter-bank market on Monday, depreciating by 0.03%. At the close of trading, the rupee settled at 278.83, marking a loss of Re0.08 against the greenback. Despite this minor setback, the local currency has shown relative stability over the past week, indicating a subtle fluctuation in its value.
Last week, the rupee largely held steady against the US dollar, ending the week with a minor change. According to the State Bank of Pakistan (SBP), the rupee closed at 278.75 on Friday, just slightly weaker than the previous week’s closing of 278.71. This marginal fluctuation highlights the steady but cautious movement in the currency markets, as investors and analysts continue to monitor both domestic and international factors that could affect the exchange rate.
On the international front, the US dollar strengthened on Monday, driven by renewed concerns over US President Donald Trump’s tariff plans. As traders weighed the potential impacts of these developments, the dollar gained some ground. Over the past week, however, the US dollar had seen its weakest performance since November 2023, largely due to reduced concerns about tariffs from the Trump administration. These worries, however, resurfaced after President Trump announced intentions to impose sweeping tariffs and sanctions on Colombia.
This decision followed a diplomatic spat in which Colombia turned away two US military aircraft carrying deported migrants as part of the US administration’s ongoing immigration crackdown. In response to these developments, the Mexican peso, often considered a barometer for tariff concerns, fell by 0.8%, reaching 20.426 per US dollar in early trading on Monday. Similarly, the Canadian dollar showed some weakness, trading at 1.43715 against the US dollar.
As the week progresses, the US dollar index, which tracks the performance of the US currency against a basket of six major currencies, stood at 107.6, staying close to the one-month low it had touched earlier. Market participants are now closely watching central bank actions, particularly the Federal Reserve’s response to President Trump’s recent calls for rate cuts. With many expecting the Fed to keep interest rates unchanged this week, the impact of these central bank policies on currency markets will likely be a focal point for investors.
Another important global factor influencing currency markets is the price of oil, which has a significant impact on exchange rates, especially for emerging market currencies like the Pakistani rupee. On Monday, oil prices slipped slightly after President Trump urged the Organization of the Petroleum Exporting Countries (OPEC) to reduce prices, following his announcement of measures to boost US oil and gas production in his first week in office. Brent crude futures fell by 0.45%, or 35 cents, to $78.15 a barrel as of 0726 GMT, following a slight increase of 21 cents on Friday.
The international developments around the US dollar, coupled with oil price movements, are expected to influence the local currency markets throughout the week. As such, the Pakistani rupee’s performance will continue to be shaped by both domestic economic factors and global financial trends. Investors and traders will be keeping a close eye on any changes in the economic outlook, central bank policies, and external factors like geopolitical events and commodity prices that could impact currency stability in Pakistan and globally.
In the coming days, the direction of the Pakistani rupee will depend on how these global trends unfold and how domestic policies interact with the broader economic landscape.