Rupee registers gain against US dollar

The Pakistani rupee saw a slight increase against the US dollar on Wednesday in the interbank market. At the close of trading, the local currency was trading at 276.95 against the dollar, marking a gain of Re0.01. Previously, on Tuesday, the rupee had settled at 276.96 against the greenback. Internationally, the US dollar faced a downturn as traders awaited further clues regarding the timing of interest rate hikes amid ongoing inflation concerns.

The greenback slipped from an 18-month peak the previous day as oil prices eased and investors reevaluated the AI-driven rally that had bolstered demand for US assets. Meanwhile, the euro maintained its gains due to budgetary concerns in France keeping regional bond yields elevated and markets on edge. The focus now shifts to the release of US consumer price index data and speeches from Federal Reserve policymakers that could shed light on the outlook for interest rates.

The dollar index, which gauges the greenback against a basket of currencies, dropped 0.02% to 102.16, following a 0.35% fall on Tuesday. The euro rose 0.04% to $1.1203, while the yen remained unchanged at 158.32 per dollar, and the British pound climbed 0.03% to $1.3256. The dollar continued its decline on Tuesday after New York Fed President John Williams indicated he anticipates one additional rate hike this year but sees no necessity for more hikes in 2027.

The US Labor Department is set to publish its September CPI, projected to have risen 0.6% month-over-month after increasing 0.4% in August, with annual inflation expected to accelerate to 3.6% from 3.4%. Additionally, the Federal Reserve will release its Beige Book. Market sentiment suggests a 77% likelihood that the Fed will maintain rates steady at its October 27-28 meeting, up from 51% a month earlier, with projections of around 75 basis points of tightening by late 2027, according to CME Group’s FedWatch Tool.

Oil prices, a crucial factor in currency parity, surged on Wednesday following the interception of two vessels in the Strait of Hormuz and Iranian officials revealing plans to employ new tactics to target ships, as Tehran endeavors to maintain high oil prices and sway the US midterm elections. Brent crude futures climbed 63 cents, or 0.6%, to $106.32 a barrel, while US West Texas Intermediate crude futures increased 66 cents, or 0.7%, to $94.80 a barrel. Both contracts saw gains exceeding $1 in earlier trade before experiencing a slight pullback.