Pakistani rupee demonstrated strength by gaining 0.14% against the US dollar during the opening hours of trading in the inter-bank market on Monday. At 10 am, the rupee reached 286.10, marking an increase of Re0.40.
Last week, the rupee halted its losing streak, closing 0.18% or Re0.53 higher at 286.50 in the inter-bank market against the US dollar. This recovery comes in the wake of a staff-level agreement (SLA) between Pakistan and the International Monetary Fund (IMF) on the first review of the $3 billion Stand-by Arrangement (SBA).
The local currency rebounded from a four-week decline following the announcement of the SLA, signaling a positive outlook for the Pakistani economy. The rupee experienced a downward trend until Wednesday before the IMF disclosed the agreement with Pakistani authorities on the SBA’s first review.
The staff-level agreement, still pending approval from the IMF’s Executive Board, could unlock around $700 million, bringing total disbursements under the program to nearly $1.9 billion, as stated by the IMF in its official statement.
Meanwhile, the US dollar faced a decline to a two-month low on Monday, extending its downtrend from the previous week. Traders express confidence that US rates have peaked, shifting focus to potential rate cuts by the Federal Reserve.
The dollar index in Asia trade reached 103.64, its lowest level since September 1, marking a nearly 2% decline from last week, the most significant weekly fall since July. The market’s perception of reduced risk in further rate hikes by the Fed stems from weaker-than-expected US economic indicators, particularly a below-estimate inflation reading.
In parallel, oil prices, a crucial indicator of currency parity, experienced an uptick on Monday. This extension of gains is attributed to expectations of OPEC+ deepening supply cuts to stabilize prices. The recent four-week decline in prices, driven by easing concerns of Middle East supply disruption amid the Israel-Hamas conflict, has prompted this proactive move.
Brent crude futures rose by 57 cents (0.7%) to $81.18 a barrel by 0400 GMT, while US West Texas Intermediate crude stood at $76.40 a barrel, up 51 cents (0.7%).
