Rupee rises further against dollar in interbank

KARACHI: The rupee appreciated further on Thursday due to better dollar availability, encouraging economic data and a rate cut by the US Federal Reserves, dealers said.

In the interbank market, the rupee finished at 277.91 per dollar, slightly up from its previous close of 278.04.According to dealers, the local unit saw a little increase in gains since exporter inflows were enough to fulfil importer demand. In addition, positive economic data boosted investor confidence.

Pakistan reported a $75 million current account surplus in August as opposed to a $246 million deficit in the previous month and a $152 million deficit in August 2023.The country posted a $171 million current account deficit in the first two months of the current fiscal year, an 81 per cent decrease over the same period last year.

Foreign direct investment (FDI) inflows to Pakistan rose 56 per cent year-on-year to $350 million in the first two months (July-August) of FY25.Global interest rate easing has begun after several years of central bank hikes in response to post-Covid demand surges and the commodity super cycle, which led to high inflation, said Chase Securities in a note.

As inflationary pressures subside, central banks are now signalling a gradual reduction in interest rates. The US Federal Reserve, the global benchmark, has reduced rates by 50 basis points, with forward guidance suggesting further cuts in the coming months, it said.“Pakistan is expected to follow a similar trajectory, with declining inflation paving the way for lower interest rates, which should help stimulate economic activity,” it added.