Wednesday’s trade saw USD/PKR within the range 154.70-154.88. The pair closed flat at 154.70. Pakistani Rupee depreciated 10.42% against the US Dollar in 2019, following another 20.38% slump in 2018.
Still, the South Asian currency has managed to recoup part of an even larger loss during the second half of 2019, supported by an improving balance of payments, a steady inflow of foreign investments in local bonds, an upgraded outlook from negative to stable by Moody’s among other factors.
Developments surrounding US-China trade relations will continue to affect market sentiment in 2020, following months-long frictions between the two countries. On December 31st US President Trump said that Phase One of the trade deal would be signed on January 15th at the White House.
In a tweet, Trump noted the deal would be signed with “high level representatives of China”. Despite it was not immediately certain who would represent the Chinese delegation at the signing ceremony, the South China Morning Post stated that Vice Premier Liu He would visit Washington to sign the agreement.
Confusion, however, remains about the agreement’s details, as no version of the text has been released to the public yet.
The spread between 3-year Pakistani and 3-year US bond yields, which reflects the flow of funds in a short term, shrank to 10.393% (1039.3 basis points) on December 31st from 10.409% (1040.9 basis points) on December 30th.
The US Dollar Index was 0.14% stronger to 96.58 in late Asian trade on Thursday, rebounding from a six-month low.
Market players focusing on PKR will be paying a close attention to the monthly report on Pakistani inflation at 8:30 GMT today. Annual consumer price inflation was reported at 12.28% in November, accelerating from 11.08% in October. Consumer prices rose at a monthly rate of 1.20% in November after increasing 1.0% in October. Since the country has faced excessively high levels of inflation over the past several years, any signs of moderating inflationary pressure would support PKR demand.
Meanwhile, at 13:30 GMT the US Labor Department will report on jobless claims. The number of people in the country, who filed for unemployment assistance for the first time during the business week ended December 27th, probably rose to 225 000, according to market expectations, from 222 000 in the preceding week. A smaller-than-expected increase in claims would support the USD.
USD/PKR was edging up 0.05% to 154.77 in late Asian session on Thursday.