The Pakistani rupee registered marginal improvement as it appreciated 0.03% against the US dollar in the inter-bank market on Wednesday.
At close, the local unit settled at 279.34 after a gain of Re0.08 against the greenback, as per the State Bank of Pakistan (SBP).
On Tuesday, the rupee remained largely stable to settle at 279.42 against the US dollar, according to the SBP.
In a key development, S&P Global Ratings on Tuesday said a more stable political environment in Pakistan is likely to be an important precondition to repairing the government’s creditworthiness.
The ratings agency in a note on Pakistan stated that together with new policy moves to improve investor confidence and bring down inflation, this could lift fiscal and external metrics sufficiently for the sovereign ratings to move to the “B” rating category.
It further stated that if the coming elections yield a government that has popular support and able to work with key institutions in the country, it will have a better chance of securing external financing from the International Monetary Fund (IMF).
The Pakistani general elections are scheduled to be held on February 8, 2024.
Globally, the US dollar remained under pressure on Wednesday after retreating from a nearly three-month high against the euro in the previous session with a decline in US bond yields adding to the drag.
Analysts pointed to technical factors for the dollar’s pullback, following a two-day rally of as much as 1.4% against the euro after unexpectedly strong US jobs data and more hawkish rhetoric from Federal Reserve Chair Jerome Powell scuppered bets for an early interest rate cut.
US Treasury yields also turned down from highs overnight on solid demand at a sale of new three-year notes, removing some support for the dollar.