Pakistani rupee edges higher in interbank trade as U.S. dollar stays firm globally

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Pakistani rupee edges higher

Highlights

The Pakistani rupee appreciates 0.01% in interbank trading on Monday, settling at 276.97 versus the U.S. dollar, up from 277.00.
The dollar index holds near its 18-month peak at 102.14 as markets eye Wednesday's U.S. CPI for Fed policy direction amid Middle East conflict.
Brent crude falls $1.54 or 1.47% to $103.18 per barrel, and WTI drops $1.54 or 1.68% to $90.31, pressuring Pakistan's external account stability.

Interbank move and global currency backdrop

As reported by Pakistan Business Recorder, the Pakistani rupee appreciates 0.01% against the U.S. dollar in interbank trading on Monday, with the local unit gaining Re0.03 from Friday's close of 277.00 to settle at 276.97.

In broader markets, the U.S. dollar holds near its strongest level in a year and a half in early Asian trade as the escalating Middle East conflict keeps investors cautious ahead of key U.S. inflation data due later this week. The dollar index, which tracks the greenback against a basket of six currencies, is slightly lower at 102.14 but remains close to the 18-month peak reached last week.

Trading stays within a narrow range as Japanese markets are shut for a holiday, reducing regional liquidity. Against the yen, the U.S. dollar is down 0.14% at 158.160, while the Australian dollar and New Zealand dollar are broadly flat at $0.6988 and $0.5614, respectively.

Fed expectations and oil market implications

The market's attention now turns to Wednesday's U.S. consumer price index report, one of the last major economic releases before the Federal Reserve's late-October interest-rate meeting. Data released last week shows U.S. consumer sentiment falling further in early October as higher living costs linked to the Middle East conflict weigh on households' view of the economy.

The Fed raises rates last month for the first time since 2023 in an effort to contain inflation, and traders continue to monitor incoming data for signs of another move. The CME FedWatch tool shows markets price in an 81% chance that the central bank leaves rates unchanged this month, up from 51% a month earlier.

Oil prices, an important factor for Pakistan's external account and currency stability, slip on Monday on expectations of additional Russian supplies. Brent crude falls $1.54, or 1.47%, to $103.18 a barrel by 0154 GMT, while U.S. West Texas Intermediate declines $1.54, or 1.68%, to $90.31 a barrel.

Our earlier article on U.S. Treasury yields moving lower highlighted how a pullback in oil prices eased pressure on borrowing costs while markets positioned ahead of key U.S. inflation data. It also explained that upcoming CPI and other releases were central to expectations for the Federal Reserve’s next rate decisions, with knock-on effects for broader financial conditions.

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