Pakistani rupee strengthens slightly amid dollar weakness

KARACHI: The Pakistani rupee saw a mild improvement against the US dollar in intraday trade on Tuesday, continuing its recent upward trend in the interbank market as global currency movements favoured emerging market units.

By mid-morning, the rupee was trading around 280.80 against the greenback, gaining 21 paisa or 0.07 percent from the previous close, according to data from the State Bank of Pakistan (SBP). This comes a day after the rupee had settled at 281.01 per dollar in Monday’s session.

So far in the current fiscal year, the rupee has appreciated by 2.76 against the dollar, marking a 0.98 percent improvement. However, it remains weaker by 2.46 or 0.88 percent since the start of the calendar year.

Impact of monetary policy and inflation outlook

The rupee’s latest movement came a day after the SBP’s Monetary Policy Committee decided to keep the benchmark policy rate unchanged at 11 percent. The central bank said that while headline inflation had risen to 5.6 percent in September, core inflation held steady at 7.3 percent, suggesting price pressures remain contained.

Analysts believe that keeping the policy rate unchanged sends a message of policy continuity and confidence in the rupee’s current stability, even as the global economic landscape remains uncertain.

Global cues and dollar weakness

Globally, the dollar index was under pressure on Tuesday as investors looked ahead to several central bank meetings expected to result in a rate cut in the United States.

Although early signs of easing tensions between the world’s two largest economies boosted investor confidence, market watchers say traders remain cautious, fearing any US-China deal may not deliver major economic benefits.

Mixed performance against other currencies

In Monday’s interbank session, the rupee’s performance against other major currencies was mixed. It strengthened 0.16 paisa against the UAE dirham, closing at 76.51, and gained 71.64 paisa against the Swiss franc to settle at 352.47. It also rose slightly against the Japanese yen, closing at 1.8370.

However, it lost some ground against the British pound, falling to 374.11, and against the euro, which closed higher at 326.50. The rupee also inched lower against the Saudi riyal, ending at 74.93.