In a marginal yet positive movement, the Pakistani rupee appreciated slightly against the US dollar on Friday, showing a 0.03% improvement in the inter-bank market. By the close of trading, the rupee had settled at 280.47, marking a gain of Re0.09 against the greenback. This was a slight recovery from the previous day when the currency closed at 280.56.
This modest rise comes amidst ongoing international developments that have seen the US dollar facing significant pressure. The broader market sentiment remained volatile due to new tariffs announced by US President Donald Trump, which sent shockwaves through global financial markets. Trump’s latest trade policies, including aggressive tariffs targeting multiple countries, have increased fears of a potential global trade war, leading to a shift in investor behavior. As a result, the US dollar has struggled to regain its footing, while other safe-haven currencies like the Japanese yen have seen a rise.
The US dollar index, which measures the dollar against a basket of six major currencies, plunged 1.9% on Thursday, its worst single-day performance since November 2022. This decline was attributed to the immediate market response to Trump’s announcement and growing concerns over the economic repercussions of the new tariffs. The US dollar was trading at 145.89 yen at 0057 GMT, a slight dip from its earlier loss of 2.2% and its lowest level since October 2.
In terms of oil prices, which are a key indicator for currency parity, the market showed a significant drop. US crude oil prices were under pressure, and both Brent and West Texas Intermediate (WTI) crude futures were heading for their largest weekly losses in over six months. Brent crude fell by $2.29, or 3.3%, to $67.85 a barrel, while WTI dropped by $2.32, or 3.5%, to $64.63. This decline was fueled by fears that the new tariffs could negatively impact global trade and reduce oil demand.
The modest improvement in the Pakistani rupee came despite these global headwinds. The inter-bank market showed a slight narrowing in the bid-offer spread for the US dollar. The bid rate stood at Rs 280.46, while the offer rate was slightly higher at Rs 280.66.
In the open market, the rupee also saw some movement against the US dollar, gaining 10 paise for buying and 1 paisa for selling. By the close of Friday’s trading session, the rupee had strengthened slightly to 279.89 for buying and 281.98 for selling. However, the rupee faced losses against other major currencies in the open market. Against the euro, the rupee lost 96 paise for buying and 1.34 rupees for selling, closing at 307.69 and 310.91, respectively. Similarly, the rupee depreciated against the UAE dirham and the Saudi riyal, although the losses were relatively minimal.
The fluctuations in the currency market reflect the ongoing economic uncertainties, both domestically and internationally. The pressure on the US dollar, coupled with fluctuations in oil prices and global trade tensions, has created a volatile environment for emerging market currencies, including the Pakistani rupee. Despite this, the slight appreciation of the rupee on Friday may offer some relief as Pakistan continues to navigate these challenges.
As the market looks ahead, investors will closely monitor any further developments related to global trade policies, oil prices, and the broader economic landscape to assess the potential impact on the rupee’s performance.