The Pakistani rupee remained largely stable against the US dollar, appreciating 0.01% in the inter-bank market on Tuesday.
At close, the local unit settled at 278.18, a gain of Re0.02 against the greenback, as per the State Bank of Pakistan (SBP).
On Monday, the rupee closed at 278.20, down by Re0.08.
In a key development, Wall Street bank Citi expected Pakistan to reach an agreement with the International Monetary Fund (IMF) for a new four-year programme of up to $8 billion by end-July.
“A larger and longer IMF EFF (Extended Fund Facility) program could be finalised by July – possibly a $7-8 billion 4-year program and secondly and a possible inflow of Saudi investments,” Nikola Apostolov at Citi wrote in a note to clients.
Meanwhile, the government of Pakistan on Monday kick-started the discussions on further engagement with the Fund as the country looks for a new and larger loan programme.
According to the Finance Division’s official statement, the IMF mission led by Nathan Porter, IMF Mission Chief called on the finance minister on Monday at the Finance Ministry to kick-start the discussions on further engagement with the Fund.
Globally, the US dollar was steady on Tuesday as investors awaited an inflation report this week that will likely shape the US rates outlook, while the yen was hovering near a two-week low, stoking intervention worries.
The currency market has been sedate this week, with investors seeking to gauge what the path the Federal Reserve will take this year in the wake of recent softer-than-expected US labour market data and comments from central bankers.
They have had to dial back their expectations of rate cuts this year due to sticky inflation and are now pricing in 42 basis points of easing this year, with 60% chance of a cut in September, according to CME FedWatch tool.
All eyes this week will be on the consumer price index on Wednesday which is expected to show core CPI rose 0.3% month-on-month in April, less than 0.4% growth the prior month, according to a Reuters poll.
Oil prices, a key indicator of currency parity, were little changed on Tuesday as investors eyed fresh drivers, including upcoming US inflation indicators and a monthly report from the Organization of the Petroleum Exporting Countries this week.
Brent crude futures inched 4 cents higher to $83.40 a barrel at 0315 GMT, while US West Texas Intermediate crude futures rose 5 cents to $79.17 a barrel.
The benchmark contracts settled higher on Monday on signs of improving demand in the US and China, world’s top two oil consumers.
Inter-bank market rates for dollar on Tuesday
BID Rs 278.18
OFFER Rs 278.38
Open-market movement
In the open market, the PKR lost 1.00 paisa for buying and gained 5.00 paisa for selling against USD, closing at 277.02 and 279.50, respectively.
Against Euro, the PKR lost 41.00 paisa for buying and 35.00 paisa for selling, closing at 297.05 and 299.81, respectively.
Against UAE Dirham, the PKR lost 1.00 paisa for buying and remained unchanged for selling, closing at 75.16 and 75.89, respectively.
Against Saudi Riyal, the PKR remained unchanged for both buying and selling, closing at 73.50 and 74.19, respectively.
Open-market rates for dollar on Tuesday
BID Rs 277.02
OFFER Rs 279.50
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