Pakistani rupee edges higher to 281.72 against dollar

The rupee appreciated 0.07% in early Friday trade, strengthening to 281.72 per US dollar in the inter-bank market.

The Pakistani rupee gained marginally against the US dollar in the opening hours of trading on Friday, appreciating 0.07% to reach 281.72 at 10:15am, a rise of Re0.2 from the previous session’s close of 281.92. The local unit’s movement comes amid cautious global currency sentiment as investors awaited a key address by Federal Reserve Chair Jerome Powell at the Jackson Hole economic symposium.Rupee Inches Higher Against US Dollar

Internationally, the dollar has held steady this week, supported by expectations surrounding US monetary policy. An unexpectedly weak July jobs report and downward revisions to hiring in May and June initially raised hopes of a sharp interest rate cut by the Fed at its September meeting. However, subsequent inflationary signals and guarded remarks from Fed officials have cooled those expectations. According to the CME FedWatch tool, traders now assign a 75% probability to a 25-basis-point cut in September, compared with 92% a week earlier.

Powell’s speech at the Jackson Hole conference in Wyoming, which began Thursday, is expected to provide clearer guidance on the central bank’s next move. Fed officials on Thursday gave little indication of support for an imminent cut, leaving markets in suspense. Analysts suggest that Powell’s tone could determine whether the dollar maintains its current trajectory or faces renewed selling pressure.

The dollar index, which measures the greenback against six major peers, was trading at 98.61 on Friday, heading for a 0.7% weekly gain and breaking a two-week losing streak. The euro slipped to $1.1613, down 0.8% for the week, while the British pound stood at $1.3416, nearly 1% lower for the week.

Oil prices, another key factor influencing emerging market currencies such as the rupee, were largely flat in early trade on Friday. Brent crude futures fell slightly by 4 cents to $67.63 a barrel, while US West Texas Intermediate (WTI) futures slipped 1 cent to $63.51. Both benchmarks had climbed more than 1% in the previous session. Despite Friday’s minor dip, Brent crude is up 2.7% this week and WTI has gained 1.1%, reversing a two-week losing streak. Market watchers attribute the rebound to fading hopes of an immediate resolution to the Russia-Ukraine conflict, which has sustained geopolitical risk premiums in oil trading.

For Pakistan, exchange rate fluctuations remain closely tied to both global energy trends and shifts in investor sentiment toward the dollar. The rupee’s stability in recent weeks has been supported by relatively steady inflows and a narrowing current account deficit. However, analysts warn that volatility in global oil prices, along with uncertainty in US monetary policy, could put renewed pressure on the local currency.

The rupee’s modest gain on Friday reflects cautious optimism in the market but also underscores the sensitivity of emerging market currencies to external factors. Investors in Pakistan are likely to keep a close eye on Powell’s Jackson Hole address and subsequent global financial market reactions to gauge the rupee’s near-term trajectory.

As the session progresses, the Pakistani rupee’s performance will depend not only on domestic economic stability but also on signals from the Federal Reserve and the direction of global commodity markets. For now, the rupee’s climb to 281.72 offers short-term relief, but its sustainability remains tied to broader international dynamics.