Rupee closes marginally higher at 277.02 against the dollar

The Pakistani rupee extended its marginal gains against the US dollar on Wednesday, appreciating 0.01% in the interbank market to close at 277.02, a gain of Re0.03. The local unit had settled at 277.05 on Tuesday.

The move came as the dollar edged higher internationally, buoyed by rising oil prices, with investors awaiting minutes of the Federal Reserve's September policy meeting and remarks from policymakers for signals on the rate path. The dollar index, which measures the greenback against a basket of currencies, rose 0.3% to 102.13, recovering from a 0.27% slide on Tuesday. The euro fell 0.4% to $1.1216, the Japanese yen weakened 0.13% to 158.31 per dollar and sterling lost 0.21% to $1.3248.

The Fed raised interest rates at its September meeting, its first increase since 2023, as it sought to contend with inflation. Expectations of a further hike this month have retreated, though markets still anticipate more increases later this year and next. According to CME FedWatch, the chance of an increase of at least 25 basis points in October stands at 21.6%, down from about 51% a week ago, while markets are pricing a 68.6% chance of a hike at the December meeting. Comments from Fed policymakers have come across as less hawkish following lower-than-expected personal consumption expenditure data and jobs figures last week.

Oil prices, a key indicator of currency parity, climbed as the market weighed supply constraints from a storm heading for US oil-producing regions and attacks by Yemen's Houthis on Saudi Arabia against increased supplies of Middle East crude. Brent futures rose 81 cents, or 0.8%, to $101.39 a barrel by 0635 GMT, while US West Texas Intermediate crude gained 61 cents, or 0.7%, to $90.05 a barrel.