Intraday trade: PKR inches lower in early session against US dollar

KARACHI: The Pakistani rupee showed little movement against the US dollar during early trade on Tuesday, hovering at Rs281.23 in the interbank market by 11:00 AM, down by just one paisa from the previous session.

The local unit had closed Monday at Rs281.22 per dollar, weakening slightly from Rs281.05 a day earlier, as higher import payments pressured the rupee amid lacklustre dollar inflows from exporters.

In the open market, the rupee remained flat at Rs282.90. Currency dealers cited rising corporate demand for the greenback, while conversions by exporters remained insufficient to support the local unit.

The broader foreign exchange market saw volatility as the US dollar struggled regionally, weighed by a dramatic two-day rally in the Taiwan dollar. The Taiwanese currency surged as much as 8 per cent, reaching a three-year high of 29.59 per dollar on Monday before settling near 30.02. The move, sparked by the conclusion of US-Taiwan trade talks and speculation of exporter conversions, marked the biggest intraday gain in over three decades.

The shock rally spilled over into other Asian currencies, amplifying pressure on the greenback in thin trading conditions, with several major markets, including China and the UK, shut for public holidays. In Hong Kong, the monetary authority intervened to maintain its currency peg, buying $7.8 billion to prevent further strengthening of the local dollar.

The US Dollar Index was recently seen up 0.2 per cent at 100.04, after sliding 4.3 per cent in April—its steepest monthly fall in more than two years. The index touched a low of 99.62 on Monday amid uncertainty ahead of the Federal Reserve’s rate decision due Wednesday. The central bank is widely expected to keep interest rates unchanged, but market watchers believe this could be the last meeting with a clear-cut outcome, as global trade and growth risks loom.

Meanwhile, the State Bank of Pakistan cut its policy rate by 100 basis points to 11 per cent on Monday, citing improved financial inflows and a projected rise in foreign exchange reserves to $14 billion by June 2025.

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