KARACHI: During the initial trading hours on Thursday, the Pakistani rupee saw a 0.16% rise against the US dollar in the inter-bank market.
By 10:10 am, it was at 283.17, marking a Re0.44 uptick. On Wednesday, the rupee saw a modest uptick, closing at 283.61 against the US dollar. Simultaneously, the Asian Development Bank (ADB) highlighted in its recent ‘Asian Development Outlook (ADO)’ report that Pakistan’s recovery continues to face limitations due to moderate confidence levels and persistent high inflation, which erodes purchasing power.
The report cited Pakistan’s inflation rate averaging 28.5% between July and October. However, it anticipates a potential easing of this rate owing to fiscal consolidation, monetary tightening, and improved availability of essential imports and food items.
Internationally, the US dollar encountered pressure following the Federal Reserve’s latest economic forecasts, signaling the conclusion of the interest-rate hike cycle and the potential for reduced borrowing costs in 2024. Fed Chair Jerome Powell, during Wednesday’s Federal Open Market Committee (FOMC) meeting, indicated that the era of substantial monetary policy tightening is likely concluding, with discussions about potential cuts in borrowing costs looming.
The majority of policymakers expressed a consensus that borrowing costs would decline in 2024. The US dollar index, gauging the dollar against various currencies, reached 102.87 after briefly touching 102.77 overnight.
Market sentiments are currently estimating a 75% probability of a rate cut in March, as per the CME FedWatch tool, compared to 54% from the previous week.
Meanwhile, oil prices, a crucial benchmark for currency equilibrium, surged during Asian trading on Thursday. This surge extended previous gains, prompted by a larger-than-expected weekly drawdown from US crude reserves and optimistic demand prospects following the US Federal Reserve’s indications of reduced borrowing costs in 2024.
Brent futures closed at $74.49 a barrel, rising by 23 cents (0.31%), at 0345 GMT. US West Texas Intermediate (WTI) crude settled at $69.58 a barrel, marking an increase of 11 cents (0.16%).”
