Rupee records gain against US dollar

The Pakistani rupee recorded a marginal gain against the US dollar, rising 0.01% in the interbank market on Monday. At the close of the trading day, the local currency was valued at 276.97 against the greenback, marking an increase of Re0.03 from the previous level. On Friday, the Pakistani rupee had settled at 277.00 per US dollar.

On the global front, the US dollar maintained its strength near its strongest level in 18 months early Asian trade on Monday. This stability was driven by ongoing tensions in the Middle East, which kept investors cautious ahead of crucial US inflation data later in the week. The dollar index, which evaluates the dollar's strength against a basket of six currencies, experienced a slight dip to 102.14, yet remained relatively close to the 18-month high it reached the previous week.

Market activity remained concentrated within a narrow range, as Japanese markets were closed for a holiday, reducing liquidity across the region.

Relative to other major currencies, the US dollar depreciated by 0.14% against the Japanese yen, trading at 158.160 yen. The Australian dollar and New Zealand dollar exhibited minimal movement, remaining roughly flat at $0.6988 and $0.5614, respectively.

The market's attention soon shifted to the US consumer price index report due on Wednesday. This data, one of the last significant economic releases before the Federal Reserve's late-October meeting on interest rates, is closely watched for indications of potential rate adjustments. Reports from the previous week revealed a decline in US consumer sentiment in early October, as rising living costs due to the Middle Eastern conflict dampened households' economic outlook.

The Federal Reserve had raised interest rates for the first time since 2023 to combat inflation, and market participants remained vigilant for further policy moves. Recent projections suggest an 81% probability of the Fed maintaining interest rates steady this month, up from 51% a month ago, according to the CME FedWatch tool.

Oil prices, which play a pivotal role in currency valuation, declined on Monday due to expectations of increased Russian oil supplies following a US deal with Moscow. The deal aimed to halt attacks on each other's energy facilities in response to a US diesel-supply agreement with Russia. Brent crude futures dropped $1.54, or 1.47%, to $103.18 per barrel by 0154 GMT, while US West Texas Intermediate crude eased $1.54, or 1.68%, to $90.31 per barrel.