Rupee records gain against US dollar

The Pakistani rupee continued its slight upward trend against the US dollar on Thursday, increasing by 0.01% in the interbank market. The currency closed at 277.17, marking a gain of Re0.03 since the previous trading session. On Wednesday, the Pakistani rupee was recorded at 277.20 against the dollar. Internationally, the US dollar maintained a two-month high, driven by a robust manufacturing figure that reignited concerns over inflation and a potential interest rate hike.

Meanwhile, a weak Treasury auction contributed to higher yields across the yield curve, further bolstering the dollar's strength. The dollar's gains pushed the euro to its lowest level in two months at $1.1378, while the British pound hovered near a three-month low at $1.3231. The dollar index, which gauges the US currency against a basket of currencies, hovered near a two-month peak at 101.1.

A more optimistic purchasing managers' index released earlier in the week heightened inflation fears, and a less-than-ideal auction of five-year U.S. Treasury notes further fueled bond selling, with yields on these notes crossing the 5% threshold for the first time since 2007. Inflationary pressures were also exacerbated by a significant 4% surge in oil prices on Wednesday, following Iran's president's defiant stance, which sent markets swirling with uncertainty over the U.S.-Iran standoff.

Traders now estimate a 70% likelihood of an additional rate hike from the U.S. central bank during their October meeting, up from a 50% probability a week prior. Oil prices, a critical factor influencing currency values, eased on Thursday after a 4% increase the day before, as Iran expressed a willingness to negotiate an end to the U.S.-Iran conflict, though significant differences persist between the two nations.

Brent crude futures dropped 92 cents, or 0.9%, to $102.16 per barrel, while West Texas Intermediate futures declined 77 cents, or 0.8%, to $91.39.