Pakistani rupee demonstrated resilience by appreciating 0.16% against the US dollar in the inter-bank market. At 10:10 am, the rupee was valued at 283.17, reflecting a noteworthy increase of Re0.44.
This positive momentum follows Wednesday’s modest gain when the rupee settled at 283.61 against the US dollar. In a related development, the Asian Development Bank (ADB) highlighted in its ‘Asian Development Outlook (ADO)’ report that Pakistan’s overall recovery is hindered by moderate confidence and high inflation affecting purchasing power.
The ADB report notes that Pakistan’s inflation rate, averaging 28.5% from July to October, is anticipated to ease with fiscal consolidation, monetary tightening, and improved availability of food and key imported inputs.
Globally, the US dollar faces pressure after the Federal Reserve’s recent economic projections signaled the end of the interest-rate hike cycle and predicted lower borrowing costs in 2024. Fed Chair Jerome Powell stated that the historic tightening of monetary policy is likely over, with a discussion of cuts in borrowing costs coming “into view.” This led to nearly unanimous projections among policymakers for a reduction in borrowing costs in 2024.
The US dollar index, measuring the greenback against a basket of currencies, stood at 102.87, reflecting market reactions to the shift in monetary policy. With a 75% chance of a rate cut in March, according to the CME FedWatch tool, markets are adjusting to the evolving economic landscape.
In parallel, oil prices, a significant indicator of currency parity, rose in Asian trade on Thursday. This surge follows a larger-than-expected weekly withdrawal from US crude storage and positive demand expectations after the US Federal Reserve’s signals of lower borrowing costs in 2024. Brent futures settled at $74.49 a barrel, while US West Texas Intermediate (WTI) crude settled at $69.58 a barrel, indicating optimism in the oil market.
