Intra-day Update: Pakistani Rupee Stages Strong Recovery Against US Dollar

The Pakistani rupee recovered some lost ground against the US dollar on Tuesday, rising 0.1% in interbank trading.

Around 12pm, the rupee was trading at 279.50, a Re0.3 rise.

Earlier in the day, the greenback reached an interbank high of 281.50, but the rupee recovered some of its losses following Finance Minister Ishaq Dar’s revelation that Pakistan had received $2 billion from Saudi Arabia.

On Monday, the Pakistani rupee also fell, sliding 0.68% to 279.8 in the interbank market.

In a significant milestone, the government stated on Monday that the recently announced relaxation on retiring Letters of Credit (LCs) by the State Bank of Pakistan (SBP) is not unlimited, as LCs will only be honoured provided sufficient inflows of dollars come into the nation.

Separately, Fitch Ratings upgraded Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘CCC’ from ‘CCC-‘ on Monday after the country reached a ‘last-minute’ agreement with the International Monetary Fund (IMF).

Internationally, the US dollar fell on Tuesday after Federal Reserve members indicated that the central bank was nearing the end of its tightening cycle, while it was trading in a narrow range ahead of a key US inflation report.

Several Fed officials said on Monday the central bank will likely need to raise interest rates further to bring down still-high inflation, but that the end to its current monetary policy tightening cycle is getting close.

The comments knocked the greenback to a two-month low of 101.88 against a basket of currencies in early Asia trade, as traders pared back their expectations of how much further US interest rates have to rise.

Oil prices, a key indicator of currency parity, edged higher on Tuesday, recouping some of the losses from the previous session, as traders focused on supply cuts by the world’s biggest oil exporters Saudi Arabia and Russia and a weaker dollar.

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