The Pakistani rupee showed a minor gain against the US dollar, appreciating by 0.05% in the inter-bank market during early trading hours on Tuesday. By 10:15 am, the currency stood at 278.55, marking an increase of Re0.13 compared to the greenback. On Monday, the rupee had closed at 278.68, as per the State Bank of Pakistan (SBP).
Globally, the US dollar remained near its highest level in over two years on Tuesday. This came as traders adjusted expectations for US interest rate cuts in 2025, following robust economic data. Concerns over Britain’s fiscal stability also kept the spotlight on the fragile sterling.
As President-elect Donald Trump prepares to assume office next week, analysts anticipate his policies will stimulate economic growth but may exacerbate inflationary pressures. The possibility of tariffs, coupled with the Federal Reserve’s cautious stance on rate cuts, has driven up Treasury yields and strengthened the dollar, while putting pressure on the euro, pound, yen, and yuan.
The dollar index, which tracks the US dollar against six major currencies, rose 0.16% to 109.59, just below the 26-month high of 110.17 reached on Monday. Following a strong jobs report on Friday, which reinforced the Fed’s conservative approach to monetary easing, market attention now shifts to the inflation report expected on Wednesday. Currently, traders are pricing in 29 basis points of easing for 2025, down from the 50 basis points projected by the Fed in December.
Oil prices, a significant factor in currency valuations, dipped slightly at the market’s opening on Tuesday but remained close to four-month highs. Chinese and Indian buyers were actively seeking new suppliers amid the Biden administration’s stringent sanctions on Russian oil. Brent crude futures fell by 22 cents (0.27%) to $80.79 a barrel, while US West Texas Intermediate (WTI) crude dropped by 16 cents (0.2%) to $78.66 a barrel. This followed approximately 2% gains on Monday, driven by US sanctions targeting Gazprom Neft, Surgutneftegas, and 183 oil-trading vessels.
