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

The Pakistani rupee recorded marginal improvement against the US dollar, appreciating 0.02% during the opening hours of trading in the inter-bank market on Tuesday.

At 10:30am, the currency was hovering at 277.63, a gain of Re0.06 against the US dollar.

On Monday, the rupee had settled at 277.69, according to the State Bank of Pakistan (SBP).

Internationally, the US dollar clung to a two-and-half-month high on Tuesday on expectations the Federal Reserve will take a measured approach to interest rate cuts, while a close battle in the upcoming US election kept investors on edge.

The dollar’s strength, boosted by rising Treasury yields, kept the pressure on the yen, euro and sterling - a theme that has been building over the past few weeks as data showed the US economy remained in a good place, resulting in traders scaling back their bets of large and rapid rate cuts from the Fed.

Four Federal Reserve policymakers expressed support on Monday for further rate cuts, but appeared to differ on how fast or far they believe any cuts should go.

The diverging views provided a taste of what might be expected at the Fed’s upcoming policy meeting on Nov. 6-7.

Markets are pricing in an 89% chance of the Fed cutting rates by 25 basis points (bps) next month, versus a 50% chance a month earlier, when investors saw an equal likelihood of a larger 50 bps cut, the CME FedWatch tool showed.

Oil prices, a key indicator of currency parity, eased on Tuesday as the top US diplomat renewed efforts to push for a ceasefire in the Middle East and as slowing demand growth in China, the world’s top oil importer, continued to weigh on the market.

Brent crude futures for December delivery were down 19 cents, or 0.3%, at $74.1 a barrel at 0350 GMT.

US West Texas Intermediate crude futures for November delivery were 18 cents lower at $70.43 a barrel on the contract’s last day as the front month.

This is an intra-day update