USD/PKR: Pakistani Rupee Advances on Improved Risk Sentiment

The Pakistani Rupee is edging very cautiously higher versus the US dollar in early trade on Wednesday. Risk sentiment is improving as the spread of coronavirus appears to be slowing. This is boosting emerging market currencies whilst dragging on demand for the safe haven US dollar.

At 10:15 GMT the Pakistani Rupee is trading 0.05% higher versus the US dollar at 154.370. USD/PKR closed the previous session 0.05% lower at 154.420.

Pakistani Rupee

The Pakistani Rupee is being underpinned by an improvement in risk sentiment across the global financial markets. The number of new cases of coronavirus appears to be slowing as China’s Hubei province, the worst affected area, reported the lowest number of new virus cases in a month. This has boosted optimism that the Chinese economy will be able to weather the storm.

The IMF warned earlier in the week that the negative economic impact of coronavirus on the Chinese economy could quickly spill over into the Pakistani economy. The IMF projected that growth could slow to 2.4% in Pakistan. Therefore, any slowdown of the spread of the virus and any optimism surrounding the Chinese economy, is also good news for the Pakistan economy and the Rupee.

US dollar

The US dollar is trading broadly flat versus its major peers on Wednesday following Jerome Powell’s testimony before the House of Representatives yesterday.

There were no surprises from Jerome Powell, who stick to the well-rehearsed script. He told Congress that he thought that the US economy was in a good place. He highlighted the strength in the US labour market and didn’t see any reason why the current US economic expansion couldn’t continue. Jerome Powell also confirmed that current monetary policy was appropriate to keep the expansion on track.

Powell also acknowledged the outbreak of coronavirus and said that the Fed would be monitoring the situation very closely. They will pay particular attention to how the virus is impacting the Chinese economy and the economies of its trading partners.

Jerome Powell’s balanced speech kept the US dollar steady. Today Jerome Powell will speak before the Senate Banking, Housing and Urban Affairs Committee at 10am EST.

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