The Pakistani rupee (PKR) recorded a marginal appreciation of 0.04% against the US dollar during early trade on Friday, continuing its recent streak of relative stability. As of 10:00am, the local unit was hovering at 283.52, up by Re0.12 compared to the previous close of 283.64 in the interbank market.
The improvement comes amid volatile global financial conditions, where the US dollar remains elevated due to strong safe-haven demand triggered by the Israel-Iran conflict.
Global Dollar Strength: Safe-Haven Rush Continues
Internationally, the US dollar is set for its biggest weekly gain in over a month, with the Dollar Index up 0.5% this week, as investors flee to safety amid rising geopolitical tensions in the Middle East. The dollar’s strength is being driven by fears of possible US military intervention in the week-old air war between Israel and Iran.
President Donald Trump has yet to make a final decision on whether the United States will join the military offensive, though the White House has stated that an announcement could come within the next two weeks.
Commodities and Currency Interplay: Oil and Inflation in Focus
Oil prices, which often impact exchange rate trends for emerging market currencies like the PKR, experienced a sharp pullback on Friday after strong gains earlier in the week. Brent crude fell $1.89 to $76.96 per barrel, but remains up nearly 4% on the week, marking a third consecutive weekly gain.
The volatility in oil prices has further clouded inflation forecasts for global central banks, already grappling with the economic ripple effects of renewed US tariffs, especially in Asia and Europe.
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Other Major Currency Moves
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The euro edged 0.16% higher to $1.151.
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The Japanese yen strengthened by 0.17%, trading at 145.23 per dollar, buoyed by hotter-than-expected inflation data in Japan.
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Minutes from the Bank of Japan’s policy meeting suggest an emerging consensus for more rate hikes, which continues to lend support to the yen.
The divergence in central bank policies—with the Federal Reserve signaling potential rate cuts in 2025, while Japan and possibly Europe lean hawkish—continues to reshape currency market dynamics.
Outlook for the PKR: Stability Under Pressure
Despite today’s small gain, the Pakistani rupee remains under pressure from external developments. The current account deficit, foreign exchange reserves trajectory, and the outcome of IMF-led structural reforms will play crucial roles in determining the rupee’s direction in the coming weeks.
With oil price volatility, import costs, and geopolitical risks all in flux, currency watchers are advised to brace for short-term fluctuations, even as Pakistan’s economic managers focus on maintaining FX stability through tight monetary policy and administrative controls.
