Pakistani rupee exhibited a slight improvement of 0.05% against the US dollar during the initial trading hours in the inter-bank market on Monday. At 10:20 am, the rupee reached 279.77, marking an increase of RS 0.13.
A significant commitment was made by the caretaker government to the International Monetary Fund (IMF), pledging to bolster reserves as conditions allow and permitting the rupee to find its market value amid normalized imports, even if pressures resurface. The caretaker finance minister and governor of the State Bank of Pakistan conveyed this commitment to the IMF through a Letter of Intent (LoI), highlighting ongoing structural reforms in the exchange companies sector aimed at improving governance and transparency.
Looking forward, the government plans to capitalize on robust program performance to progressively enhance macroeconomic sustainability, creating conditions for sustained and balanced growth.
In the preceding week, the rupee experienced a gain of Re0.46 or 0.16%, settling at 279.9 against the US dollar in the inter-bank market. This marked the tenth consecutive week of the local currency strengthening against the greenback, propelled by the announcement of a staff-level agreement (SLA) between Pakistan and the IMF on the first review of the $3 billion Stand-by Arrangement (SBA), resulting in the approval of the second tranche of the package.
On the global front, the US dollar faced challenges in maintaining gains during early Asian trade on Monday. The dollar’s trade-weighted index declined by 0.07% to 103.19 and remained flat against the euro at $1.0898. The dollar’s tentative and uncertain rally this year reflects investor indecision about the Federal Reserve’s potential rate cuts.
Recent data indicating resilient US economic activity, despite historically high interest rates, prompted a reassessment of market expectations for rate cuts, delaying the anticipated timeline to as late as March.
Meanwhile, oil prices, a critical indicator of currency parity, declined for a second consecutive day due to economic headwinds affecting the global oil demand outlook. This overshadowed geopolitical concerns in the Middle East and an attack on a Russian fuel export terminal over the weekend. Brent crude fell by 41 cents, or 0.5%, settling at $78.15 a barrel by 0105 GMT, following a 54-cent decrease on Friday.
