Rupee sees marginal decline against US dollar

The Pakistani rupee registered a marginal decline, depreciating 0.06% against the US dollar in the inter-bank market on Tuesday.

At close, the currency settled at 278.66, a loss of Re0.16, against the greenback.

On Monday, the currency had settled at 278.50 against the US dollar.

In a key development, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) on Monday reduced the key policy rate by 100 basis points, taking it to 19.5%, its second successive decision of a cut.

Globally, the US dollar and yen kept within close ranges on Tuesday as traders awaited key central bank decisions, kicking off with midweek monetary policy meetings from the Bank of Japan and Federal Reserve that could set the tone for coming weeks.

The Fed is widely expected to stand pat on Wednesday, although markets are betting the US central bank will begin cutting rates at the following meeting in September. Investors will be listening for any hints that Fed Chair Jerome Powell may drop on how soon policymakers are prepared to cut rates at his press conference.

While the Fed does not meet in August, Powell could also use the Jackson Hole gathering of central bankers later in the month to prepare the market for a rate cut, giving policymakers more time to assess economic data.

The dollar index, which measures the currency against a basket of peers, was little changed at 104.56.

Oil prices, a key indicator of currency parity, steadied on Tuesday near its lowest levels since early June as worries about demand in China were balanced by a government pledge of policy measures for the economy and the prospect of lower US crude and product inventories.

A raft of disappointing economic news from China, the world’s largest crude importer, has been weighing on commodity prices.

China’s manufacturing activity likely shrank for a third month in July, a Reuters poll showed on Monday.