Rupee secures gain against US dollar

The Pakistani rupee continued its gradual appreciation against the US dollar, closing Tuesday at 277.12, up 0.01%. This marked a gain of Re0.03 from Monday's rate of 277.15. Internationally, the US dollar strengthened near a two-month peak due to volatile oil prices and rising Treasury yields, although gains were modest as traders awaited US economic data.

The euro dropped to its weakest level in three months against the dollar at $1.1367 after the European Central Bank hinted at cautious measures to tame inflation. The British pound remained stable around $1.3248, near a three-month low. The dollar index, tracking the greenback's performance against a basket of currencies, edged higher to 101.2, on track for a 1.8% gain this month, its best since June.

Meanwhile, a surge in US Treasury yields pushed the 10-year benchmark to its highest since 2007 and the 30-year to its highest since 2004. The two-year yield also surged to its highest in over two years, nearing 5%. Upcoming US data releases, such as the PCE price index on Wednesday and nonfarm payrolls on Friday, are anticipated to bolster the likelihood of further Fed rate hikes later in the week.

Market sentiment now suggests a more than 70% probability of a Fed rate hike at the end of October, up from 57% a week prior, according to CME Group’s FedWatch tool. Oil prices, crucial for currency valuation, surged for two consecutive days as worries over Middle East supply disruptions due to the US-Israeli conflict with Iran overshadowed signs of increasing regional crude exports.

Brent crude futures for November climbed $1.71, or 1.6%, to $106.99 a barrel, while December futures rose $1.68 to $99.51 a barrel. US West Texas Intermediate crude increased to $94, up $1.4, or 1.5%.