The Pakistani rupee snapped its five-day-long winning streak on Tuesday as the local currency shed 0.24% in the interbank market.
The local unit settled the day at 262.51 against the US dollar in the interbank market after a decline of Rs0.63 compared to Monday’s close of 261.88.
The last cycle of currency devaluation pushed Pakistan’s real effective exchange rate (REER) to 92.8 in January 2023 from 96.2 a month earlier, data from the State Bank of Pakistan (SBP) showed.
The decline in the REER – an index of the price of a basket of goods in one country relative to the price of the same basket in that country’s major trading partners – is driven by the rupee’s massive depreciation against the US dollar during the month of January.
In January, authorities decided to remove the cap on the exchange rate in a bid to meet one of the key lending conditions set by the International Monetary Fund (IMF) for the revival of its stalled $6.5 billion loan programme.
However, the rupee has maintained a rising trend in the last few days. Meanwhile, in the open market, the domestic currency loosed Rs1.25 to settle at 269 per dollar on Tuesday, according to the Exchange Companies Association of Pakistan.
Amid other developments, the National Assembly passed the IMF-dictated Rs170 billion Finance (Supplementary) Bill, 2023.
Globally, the dollar index, which measures the US currency against six other rivals, was last at 104.11, just below a six-week high of 104.67 touched on Friday.
The market is now pricing US interest rates to peak at 5.30% in July and remain above 5% by the end of the year, moving away from expectations of deeper rate cuts this year.
The yield on 10-year Treasury notes was up 2.3 basis points to 3.852%, after touching a three-month high on Friday. The yield of the two-year US Treasury paper, which typically moves in step with interest rate expectations, was up 3.5 basis points at 4.658%.