The Pakistani rupee recorded a modest gain against the US dollar, closing at Rs. 278.12 in the inter-bank market on Friday. This marked an improvement of Re. 0.11 from the previous day’s close of Rs. 278.23, as per data from the State Bank of Pakistan (SBP).
In the open market, the rupee also showed a slight uptick, gaining 2 paise for buying and 3 paise for selling against the US dollar. It closed at Rs. 277.28 and Rs. 279.07, respectively. Against the euro, the rupee saw a significant gain of Rs. 1.05 for buying and 93 paise for selling, settling at Rs. 289.40 and Rs. 291.66. The currency remained stable against the UAE Dirham at Rs. 75.45 for buying and Rs. 76.00 for selling. Meanwhile, the rupee lost a single paisa against the Saudi Riyal for buying, closing at Rs. 73.74, while remaining unchanged for selling at Rs. 74.25.
Global Trends Impacting the Rupee
Globally, the US dollar strengthened to a 2.5-week high against major currencies, supported by expectations of a Federal Reserve rate cut next week. However, market speculation suggests the Fed may adopt a cautious approach to further reductions. This sentiment boosted the dollar index, which tracks the greenback against a basket of six major currencies, pushing it to 107.05—its highest level since November 26. The index gained more than 1% over the week, underlining the dollar’s resilience.
The US dollar also gained traction against the euro and Swiss franc, following rate cuts by their respective central banks, and remained strong against the Japanese yen amid expectations that the Bank of Japan would avoid a rate hike in its upcoming meeting.
Economic data from the United States showed mixed signals. While producer price figures pointed to some softness, the rise in unemployment claims indicated a gradual cooling of the job market, aligning with market expectations. Traders are confident of a Fed rate cut on December 18 but assign only a 21% probability of another cut in January, according to CME’s FedWatch tool.
Oil Prices and Currency Parity
Oil prices, a critical factor in currency parity, exhibited stability on Friday, heading for their first weekly rise since late November. Concerns over additional sanctions on Iran and Russia heightened supply worries, while a surplus outlook tempered market reactions. Brent crude futures edged up by 7 cents to $73.48 per barrel, while US West Texas Intermediate crude rose by 9 cents to $70.11 per barrel.
The stabilization of oil prices, coupled with global currency trends, continues to influence the rupee’s performance. The interplay between local and international factors will remain pivotal as Pakistan navigates its economic challenges.
Inter-Bank and Open-Market Rates
Inter-Bank Dollar Rates (Friday):
- Bid: Rs. 278.12
- Offer: Rs. 278.32
Open-Market Dollar Rates (Friday):
- Bid: Rs. 277.28
- Offer: Rs. 279.07
The rupee’s marginal recovery underscores a delicate balance in Pakistan’s currency market, influenced by both domestic monetary policies and global economic developments. With the Federal Reserve’s upcoming rate decision and fluctuating oil prices, the rupee’s trajectory will depend on how these dynamics unfold in the coming weeks.