Intra-day update: rupee records marginal improvement against US dollar

The Pakistani rupee registered marginal improvement against the US dollar, appreciating 0.04% during the opening hours of trading in the inter-bank market on Tuesday.

At 10:30am, the currency was hovering at 277.75, a gain of Re0.12 against the US dollar.

On Monday, the rupee had settled at 277.87, according to the State Bank of Pakistan (SBP).

The currency market is now factoring in the International Monetary Fund (IMF) Executive Board meeting that is scheduled to take Pakistan’s 37-month Extended Fund Facility (EFF) of about $7 billion on its agenda on September 25.

Globally, the Indian rupee is expected to open little changed to slightly higher on Tuesday amid a dovish Federal Reserve outlook, though the upside is seen largely capped following the price action in the previous session.

The 1-month non-deliverable forward indicated that the rupee will open at 83.53-83.55 to the US dollar compared with 83.5525 in the previous session.

The likelihood of one more 50 basis points rate cut by the U.S. central bank at their next meeting in November is expected to be supportive of rupee and other Asian currencies.

Odds of 50 bps rate cut at that meeting have now climbed to 54% from 30% a week back, per the CME FedWatch Tool. The odds were just 10% a month back

Fed officials on Monday backed more rate cuts to protect the labour market, though the pace at which they will slash borrowing cost remained uncertain.

Focus now turns to Fed Chair Jerome Powell’s remarks on Thursday.

Oil prices, a key indicator of currency parity, rose on Tuesday on news of fresh monetary stimulus from top importer China, and concerns escalating tensions in the Middle East could hit supply from the key producing region, while a major hurricane loomed over the U.S., the world’s biggest crude producer.

Brent crude futures for November were up 69 cents, or 0.93%, at $74.59 a barrel at 0330 GMT. U.S. WTI crude futures for November rose 74 cents, or 1.05%, to $71.11.

Both contracts closed lower on Monday as demand worries took precedence in investors’ minds after disappointing euro zone business activity and lingering concerns about Chinese fuel consumption.

This is an intra-day update