March 5, 2025 — The Pakistani rupee remained relatively stable against the US dollar in the early hours of trading on Wednesday, showing minimal fluctuations compared to the previous session.
At 10:10 AM, the rupee was trading at 279.73 against the US dollar, marking a slight loss of Re0.01 compared to Tuesday’s closing rate of 279.72. Despite this marginal dip, the currency remains largely steady, indicating a period of stability amid ongoing global financial developments.
On the international front, the US dollar hovered near a three-month low against major currencies as fresh fears of a trade war escalated following the imposition of new tariffs. US President Donald Trump’s 25% tariffs on imports from Mexico and Canada, along with 20% duties on Chinese goods, have raised concerns about the potential economic repercussions. As these tariffs came into effect on Tuesday, both China and Canada retaliated with their own countermeasures, further fueling fears of a prolonged global trade conflict. Mexico, too, has indicated that it will respond, although specific details remain unclear.
As a result of these developments, the US dollar index, which tracks the value of the greenback against a basket of major currencies including the euro and sterling, was little changed at 105.60. This followed a two-day decline of 1.9%, with the index reaching 105.49 for the first time since December 6. The euro strengthened to its highest point in nearly four months, climbing to $1.0637, boosted by a significant agreement between German political parties to establish a 500-billion-euro infrastructure fund.
Meanwhile, the Chinese yuan showed resilience in offshore trading, bolstered by a 0.7% rally the previous session. This came as China’s National People’s Congress (NPC) commenced, with Beijing maintaining its 5% economic growth target for 2025, which helped bolster investor sentiment towards the yuan. The ongoing political events and economic projections in China have contributed to a generally stable outlook for the yuan despite global uncertainties.
Oil prices also played a significant role in the currency landscape on Wednesday. Crude oil prices fell to six-month lows, driven by concerns that the new trade tariffs could dampen global economic growth and, consequently, fuel demand. Brent crude futures dropped 15 cents to $70.89 per barrel, after hitting a low of $69.75 in the previous session, while US West Texas Intermediate (WTI) crude saw a 0.6% decrease, settling at $67.86 per barrel, marking its lowest settlement since December.
The volatility in the oil market is closely watched by currency traders, as fluctuations in crude prices can significantly influence currency values, particularly for oil-dependent economies like Pakistan. Lower oil prices generally put pressure on the rupee, while higher oil prices tend to offer some relief by improving the country’s trade balance.
In summary, while the Pakistani rupee remained stable against the US dollar during the early hours of trading on Wednesday, global economic developments such as new trade tariffs and fluctuations in oil prices are likely to continue influencing its value. As investors closely monitor these developments, the rupee’s stability may face challenges in the coming weeks, depending on the outcome of the global economic situation.