Rupee sees marginal decline against US dollar

The Pakistani rupee depreciated marginally against the US dollar, falling 0.05% in the inter-bank market on Tuesday.

At close, the local unit settled at 278.50, a decline of Re0.13 against the greenback.

On Monday, the rupee had closed at 278.37 after a loss of Re0.09.

In recent weeks, the domestic currency has largely been around 277-279 against the dollar as Pakistan moves forward with its plan to win a longer and longer International Monetary Fund (IMF) bailout programme.

In a key development, the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) decided on Monday to reduce the key policy rate by 150 basis points (bps), taking it to 20.5%, effective from June 11, 2024.

In its statement, the MPC said that while the significant decline in inflation since February was broadly in line with expectations, the May outturn was better than anticipated earlier.

This was the first cut in the key policy rate in four years. The last time the central bank reduced the rate was in June 2020 during the pandemic. Since then, the interest rate has gradually gone from 7% to a record high of 22% where it stayed for almost a year.

Globally, the US dollar hovered near a one-month peak against the euro and pushed to a one-week high versus the yen on Tuesday as traders braced for crucial US inflation data and fresh Federal Reserve interest rate forecasts the following day.

The US currency was supported by higher Treasury yields in the aftermath of surprisingly robust domestic jobs data at the end of last week, which sparked a dramatic paring of bets for Fed rate cuts this year.

The US dollar index, which measures the currency against the euro, yen and four other major peers, was little changed at 105.16, after reaching 105.39 on Monday for the first time since May 14.

Oil prices, a key indicator of currency parity, were largely steady on Tuesday, as investors waited for U.S. and China inflation data and the outcome of the Federal Reserve’s policy meeting to see how changing prices could hit demand.

Brent crude futures fell 14 cents, or 0.2%, to $81.49 per barrel by 1121 GMT, easing after a recovery from a close of $77.52 a week earlier. That close, the lowest since February, came as investors fretted about oversupply and low demand through the rest of 2024.

U.S. West Texas Intermediate (WTI) crude futures slipped 18 cents, or 0.2%, to $77.56.

Inter-bank market rates for dollar on Tuesday

BID                            Rs 278.50

OFFER                      Rs 278.70

Open-market movement

In the open market, the PKR gained 7 paise for buying and lost 18 paise for selling against USD, closing at 277.63 and 280.33, respectively.

Against Euro, the PKR lost 25 paise for buying and 29 paise for selling, closing at 296.40 and 299.30, respectively.

Against UAE Dirham, the PKR gained 9 paise for buying and 8 paise for selling, closing at 75.13 and 75.87, respectively.

Against Saudi Riyal, the PKR gained 31 paise for buying and 29 paise for selling, closing at 73.08 and 73.80, respectively.

Open-market rates for dollar on Tuesday

BID                            Rs 277.63

OFFER                      Rs 280.33