USD/PKR traded in a narrow range around the 155 soft peg on Thursday. The pair has retreated almost 2% over the past six months, while still being up nearly 12% year-to-date.
Developments surrounding US-China trade agreement still remains in focus. Beijing said on December 25th that it was in close communication with Washington in a trade deal signing ceremony. The announcement came one day after US President Trump said that a signing ceremony would be held at the White House.
So far, the terms of the trade agreement remain unknown. China has said that details of the deal will be disclosed once the latter is signed.
“There have been some doubts over whether they can really sign a deal. But this week, China has announced cuts in its tariffs while Trump also talked about a ceremony for the deal. So it feels more likely that the deal will come through,” Ei Kaku, a currency strategist at Nomura Securities, was quoted as saying by Reuters.
Recent trade optimism has buoyed riskier assets such as stocks and emerging market currencies.
“While global share prices have been rallying, the currency market has seen limited reaction so far, but I think currencies will have a catch-up to do,” Koichi Kobayashi, chief manager of forex at Mitsubishi UFJ Trust Bank, said, cited by Reuters.
The spread between 3-year Pakistani and 3-year US bond yields, which reflects the flow of funds in a short term, expanded to 10.650% (1065.0 basis points) on December 26th from 10.468% (1046.8 basis points) on December 25th.
From a macroeconomic perspective, the United States and Pakistan are not scheduled to release any relevant reports today.
The US Dollar Index was down 0.12% to 97.44 in late Asian trade on Friday. USD/PKR was edging up 0.34% to 155.22 in late Asian session on Friday.
