The Pakistani rupee registered a marginal gain against the US dollar, appreciating 0.05% during the opening hours of trading in the inter-bank market on Monday.
At 10:20am, the currency was hovering at 277.50, a gain of Re0.14 against the US dollar.
The rupee weakened marginally during the previous week as it depreciated Re0.12 or 0.04% against the US dollar. According to the State Bank of Pakistan (SBP), the local unit closed at 277.64, compared to 277.52 it had closed the week earlier against the greenback.
The International Monetary Fund (IMF) in its staff report, released last week, warned that Pakistan’s capacity to repay the Washington-based lender was subject to significant risks, adding that the country remained critically dependent on policy implementation and timely external financing.
Globally, the US dollar extended its gains in early Monday trades in Asia as a holiday in Japan sapped liquidity, leaving China’s somewhat disappointing weekend stimulus announcements the focus of market attention.
The dollar index was at 103.10, up a touch and closing in on last week’s peak, its highest since mid-August, on the back of traders reducing bets on further jumbo rate cuts by the Federal Reserve at its remaining meetings this year.
Having fallen to a year-to-date low of 100.15 late last month, the dollar index has found support from expectations that the Federal Reserve will deliver a 25-basis-point rate cut next month, not the 50bp that it had opted for in September.
Oil prices, a key indicator of currency parity, fell by more than $1 a barrel, losing over 1.5% in early trading on Monday. Disappointing Chinese inflation data and a lack of clarity on Beijing’s economic stimulus plans stoked fears about demand.
Brent crude futures were down $1.26, or 1.59%, at $77.78 per barrel by 0020 GMT, and US West Texas Intermediate crude futures fell $1.20, or 1.59%, to $74.36 per barrel.
The negative news from China outweighed market concerns over the lingering possibility an Israeli response to Iran’s Oct. 1 missile attack could disrupt oil production, though the US has cautioned Israel against targeting Iranian energy infrastructure.
This is an intra-day update