The Pakistani rupee gained 0.18% versus the US dollar during the early hours of trade in the interbank market on Tuesday.
At around 11:45 a.m., the rupee was trading at 286.20, up Re0.51.
On Monday, the rupee rose slightly against the US dollar, gaining 0.01% to settle at 286.71.
In a significant development, the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) decided in an emergency meeting on Monday to raise the benchmark policy rate by 100 basis points (bps) to a record high of 22% in response to deteriorating inflation expectations, followed by the imposition of new taxes in the budget.
To combat rising inflation, the MPC has raised the policy rate by 825 basis points (bps) this fiscal year (FY23).
Separately, Pakistan’s sovereign dollar-denominated bonds rose on Monday after the country’s parliament adopted a revised budget in a last-ditch effort to reach an agreement with the International Monetary Fund (IMF).
Globally, the US dollar held its ground against major currencies on Tuesday as tensions in Russia simmered and traders looked ahead to US data that could influence when interest rates are raised.
Russian President Vladimir Putin stated on Monday that he allowed an unsuccessful mutiny to continue for as long as it did in order to avoid bloodshed, a crisis that sent the dollar to a 15-month high against the rouble.
This week’s US data includes durable goods orders, housing figures, and consumer surveys from The Conference Board and the University of Michigan.
The Federal Reserve is expected to raise its funds target rate by 25 basis points in July, but the path after that is less certain.
The global dollar index declined to 102.573 from 102.692 at the previous close.
Oil prices, a crucial measure of currency parity, rose on Tuesday, boosted by concerns about political instability in Russia and potential supply interruptions, as well as optimism about US demand ahead of the summer driving season.