Rupee staggers for second day vs $ to reach 278.4

KARACHI: Pakistani rupee staggered against the US dollar in the interbank market for the second session in a row and depreciated by 14 paisas on Thursday.
According to details, the rupee opened at 278.26 against the greenback in the interbank market and closed at 278.40, going down by 0.05 percent. The rupee depreciated by eight paisas on Wednesday last while it gained nine paisas against the US dollar last week.
Meanwhile, the US dollar skidded to multi-month lows on Thursday after US core inflation hit its slowest in three years and retail sales turned flat, which pulled forward expectations for rate cuts in the world’s biggest economy. Core US inflation slowed to an annualised 3.6 percent in April, Wednesday’s data showed, in line with market expectations.
That is well above the Federal Reserve’s 2 percent goal, but since it eased from 3.8 percent a month earlier, investors saw it as opening the way for a rate cut as soon as September or perhaps even earlier, as the US presidential election looms in November. The US dollar index made its heaviest one-day percentage drop for the year so far overnight, falling 0.75% and through its 200-day moving average.
Meanwhile, Pakistan’s macroeconomic conditions improved during the first half of fiscal year 2024, the State of Pakistan’s economy report for the first half of FY24 released on Tuesday said. The report said real GDP, driven by the agriculture sector, grew by 1.7 percent in the first half of FY24 compared to 1.6 percent in the same period in FY23, and a contraction of 1.9 percent in the second half of FY23.
Pakistan marches towards stability as formal discussions with the International Monetary Fund (IMF) for a longer and larger program have been initiated. It is crucial to note that Pakistan achieved satisfactory results under the Standby Arrangement with the International Monetary Fund (IMF), meeting all seven QPCs for end-December 2023. However, the IMF has raised concerns that a potential resurgence in Pakistan’s social tensions, reflecting the complex political scene and high cost of living, could weigh on policy and reform implementation.- TLTP