A measure of the US Dollar's value against a basket of six major currencies (Euro, Yen, Pound, Canadian Dollar, Swedish Krona, Swiss Franc) — the standard global gauge of overall Dollar strength.
Source: Yahoo Finance, ICE US Dollar Index futures (DX-Y.NYB), monthly closes.
The US Dollar Index (DXY) tracks the Dollar's value against a fixed basket of six major currencies, heavily weighted toward the Euro. A rising DXY means the Dollar is strengthening broadly against major currencies; a falling DXY means it's weakening.
DXY doesn't include the Pakistani Rupee or most emerging-market currencies directly — it's a gauge of the Dollar's strength against other major developed-market currencies, not a direct measure of USD/PKR. But because nearly all emerging-market currencies (including the Rupee) trade against the Dollar, a broadly strengthening Dollar tends to put depreciation pressure on the Rupee too, even without any change specific to Pakistan.
Global commodities including oil and gold are priced in Dollars, so DXY moves also affect their prices indirectly: a stronger Dollar often (though not always) coincides with softer Dollar-denominated commodity prices, since it takes fewer Dollars to represent the same real value.
A broadly strengthening Dollar (rising DXY) is one of the external, Pakistan-independent forces that can add depreciation pressure on the Rupee, alongside domestic factors like the current account deficit and reserve levels.
DXY is also a rough proxy for global risk appetite and US interest rate expectations — a stronger Dollar often coincides with tighter global financial conditions, which can raise the cost and difficulty of external borrowing for emerging markets like Pakistan.