Rupee Holds Strong as IMF Talks and Inflation Data Awaited
The Pakistani rupee exhibited stability, showing a marginal depreciation of 0.01% against the US dollar during early trading hours in the inter-bank market on Thursday.
As of 10:20 AM, the rupee stood at 278.47, reflecting a slight decline of Re0.02 compared to the previous session. On Wednesday, the currency had settled at 278.45 against the dollar, as reported by the State Bank of Pakistan (SBP).
In recent months, the rupee has largely hovered within the 277-279 range, with market participants closely monitoring developments regarding the International Monetary Fund’s (IMF) Executive Board approval for the $7 billion Extended Fund Facility.
In a significant development, Moody’s Ratings upgraded Pakistan’s local and foreign currency issuer and senior unsecured debt ratings from Caa3 to Caa2. The agency also expressed optimism about the IMF’s approval of the $7 billion package in the near future.
On the global front, the US dollar held firm on Thursday, recovering from recent losses as traders anticipated a key U.S. inflation report later in the week. This report, expected on Friday, could provide insights into the Federal Reserve’s future rate decisions.
Friday’s core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, has been a focal point for traders in a week otherwise lacking major market-moving data. The US dollar maintained gains in early Asia trading, having risen 0.48% against a basket of major currencies in the previous session, driven partly by month-end demand.
Market expectations remain high for a 25-basis-point rate cut from the Fed next month, with a 34.5% likelihood of a more substantial 50-basis-point reduction, according to the CME FedWatch tool. Despite these fluctuations, the US dollar index steadied at 100.94, after falling to a 13-month low of 100.51 earlier in the week.
In commodities, oil prices, a critical factor influencing currency parity, edged higher on Thursday following two sessions of losses. Concerns over supply disruptions in Libya reemerged, although these were tempered by a smaller-than-expected draw in U.S. crude inventories, which dampened demand projections.
Brent crude futures increased by 9 cents, or 0.11%, reaching $78.74 per barrel by 0355 GMT, while U.S. West Texas Intermediate crude futures rose by 15 cents, or 0.2%, to $74.67 per barrel. Both contracts had dropped by over 1% on Wednesday after data revealed a reduction in U.S. crude inventories by 846,000 barrels to 425.2 million last week, falling short of analysts’ expectations of a 2.3 million barrel draw, according to a Reuters poll.
Currency Maintains 278-279 Range in Inter-Bank Market.
