Rupee records gain against US dollar

The Pakistani rupee continued its slight increase against the US dollar on Tuesday, closing at 276.65. This represents a gain of Re0.01 compared to the greenback. The previous week, the rupee also saw a marginal gain, appreciating 0.03% in the inter-bank market. The local unit ended at 276.66, marking a rise of Re0.09 from the level it closed at a week ago, according to State Bank of Pakistan (SBP) data.

Internationally, the US dollar experienced a respite after a turbulent few days and remained stable in Tuesday's Asia session while traders awaited US inflation data that could potentially boost the dollar if it reinforced expectations of a rate hike. A decrease in oil prices coupled with gains in stock markets had weakened the dollar as investors shifted towards riskier assets.

Meanwhile, the trade-sensitive Australian dollar surged by nearly 1% to $0.6921 early on Tuesday, while the New Zealand dollar experienced even greater gains, trading at $0.5624, both remaining steady in the morning Asia trade. The euro surged 0.7% overnight to $1.1220, reversing its Friday decline when robust US jobs data bolstered the dollar and interest rate expectations.

This brought the euro/dollar pair close to the middle of a range it had maintained for a month. Currently, traders are bullish on the dollar, and the dollar index has gained this year, as initial expectations of US interest rate cuts transitioned into anticipation of hikes after the Iran-Israel conflict escalated oil prices and fuelled inflation.

A robust October jobs report, with employment exceeding forecasts, has markets pricing an 85% chance of a Federal Reserve rate increase the following month. Oil prices, a critical factor in determining currency parity, declined on Tuesday, following a 1% drop earlier in the session, after US President Donald Trump expressed doubts about military action against Iran, easing concerns of sustained Middle East supply disruptions.