Intraday Report: Pakistani Rupee Strengthens Below 280 Against US Dollar

In the early hours of Monday's trading session, the Pakistani rupee demonstrated resilience against the US dollar, experiencing a 0.21% appreciation in the inter-bank market.

As of 10:30 am, the rupee stood at 279.78, marking an increase of Re0.58 in the inter-bank market.

Throughout the previous week, the Pakistani rupee sustained its upward trajectory versus the US dollar. The local currency witnessed a rise of Rs1.04 or 0.37%, concluding at 280.36 against the greenback in the inter-bank market.

This positive trend can be attributed to the recently announced staff-level agreement (SLA) between Pakistan and the International Monetary Fund (IMF) regarding the first review of the $3 billion Stand-by Arrangement (SBA). This development resulted in the approval of the second tranche of the package.

The IMF Executive Board completed the initial review of the SBA last week, leading to the immediate disbursement of $700 million.

As of January 5, the foreign exchange reserves held by the State Bank of Pakistan stand at $8.15 billion, with expectations of further augmentation through IMF inflows.

On the global front, the US dollar exhibited a decline on Monday, fueled by renewed expectations of a Federal Reserve rate cut in March. Concurrently, the Chinese yuan faced challenges, hovering near a one-month low ahead of significant economic data releases later in the week.

Anticipation of a Fed cut gained momentum after Friday's data revealed an unexpected fall in US producer prices for December, causing US Treasury yields to slide.

The US dollar index remained steady at 102.50, maintaining a largely sideways trajectory over the past few sessions.

In the realm of oil prices, a crucial indicator of currency parity, there was a marginal uptick on Monday. Traders monitored potential supply disruptions in the Middle East following strikes by US and British forces aimed at preventing Houthi attacks on Red Sea ships in Yemen.

Brent crude futures rose by 13 cents, or 0.2%, reaching $78.42 a barrel by 0405 GMT, following a 1.1% increase on Friday.

US West Texas Intermediate crude stood at $72.73 a barrel, up by 5 cents, or 0.1%, building on nearly a 1% gain in the previous session.

Last week, these benchmarks surged by more than 2%, reaching their highest intraday levels this year. This ascent was a response to extensive air strikes launched by US and British forces against Houthi forces, retaliating for months of attacks on Red Sea shipping, which the Iran-backed fighters justified as a reaction to the conflict in Gaza.