Dollar surges Rs3.74 despite having a beating in global money markets

Today's performance in complete contrast to greenback's slide against euro, yen, sterling

KARACHI (Dunya News) – The US dollar made more gains against the rupee despite performing badly against major currencies around the globe as the local currency tumbled in interbank trading on Tuesday.

By the time this report was filed around 1:20pm, the dollar was available for Rs283 in interbank trading against the previous day’s closing of Rs279.26.

Interbank closing #ExchangeRate for today https://t.co/Szwjztp04u#SBPExchangeRate pic.twitter.com/NFuoY1Rvhq

— SBP (@StateBank_Pak) July 17, 2023

During trading in Asian markets earlier in the day, the dollar wobbled near an over one-year low against its major peers, as investors awaited fresh catalysts to gauge if the greenback has further downside in the wake of last week's cooler-than-expected US inflation report.

The US dollar index, which measures the greenback against a basket of six currencies, dipped slightly to 99.84 in early Asia trade, after having tumbled to its lowest since April 2022 on Friday.

The index also clocked its worst week of 2023 last week, after data showed US inflation subsided further with consumer prices registering their smallest annual increase in more than two years, taking pressure off the Federal Reserve to continue raising interest rates.

Against the greenback, the euro hit a fresh 17-month high of $1.1256, while sterling gained 0.15 per cent to $1.3094, not far from last week's top of $1.3144, also its highest since April 2022.

Money markets have largely priced in a 25-basis-point rate hike from the Fed at its policy meeting later this month, though see rates coming down as early as December.

Conversely, investors expect the European Central Bank and the Bank of England to have further to go in their rate-hike cycle. Elsewhere, the Japanese yen rose marginally to 138.66 per dollar and remains more than 4pc clear of a seven-month low it hit last month.

The Bank of Japan (BOJ) holds its monetary policy meeting next week, with investors on the lookout for whether the central bank will start phasing out its ultra-dovish policy stance.

In other currencies, the Australian dollar pared some earlier gains after minutes of the Reserve Bank of Australia's July policy meeting showed the decision to keep interest rates on hold came as policy was clearly restrictive.

The Aussie was last 0.07pc higher at $0.6821.

The New Zealand dollar was nursing losses from the previous session, rising 0.1pc to $0.6332.

The Antipodean currencies, often used as liquid proxies for the Chinese yuan, had dipped on Monday after China's second quarter GDP data showed the world's second largest economy growing at a frail pace as demand weakened at home and abroad.

The offshore yuan edged marginally higher to 7.1749 per dollar.  

It’s a developing story. Details to follow.