USD/PKR: Pakistani Rupee Pares Gains Despite Upbeat Commentary

The Pakistani Rupee slipped marginally in early trade on Tuesday after closing Monday’s session 01 paisa lower at 154.21. The US dollar Pakistani Rupee exchange rate is trading 3 paisa higher at 154.24 at 10:00 GMT.

Encouraging Commentary Surrounding Pakistan Economy

The Pakistani rupee has been under pinned by encouraging commentary from the State Bank of Pakistan Governor and by international players such as Credit Suisse. Earlier this week the governor Reza Baqir, of the State Bank of Pakistan said that the Pakistan economy had recently stabilised and was entering a growth phase. He said that “we can say with confidence that we have put the worst behind us” as he spoke at the CEO Summit Asia, citing export growth of 4.5% in the first half of the year and 12% returns on the stock exchange.

His comments were quickly followed by an assessment from Swiss financial services firm Credit Suisse, which concluded that fundamentals in Pakistan have improved significantly.

Separately, the Ambassador Yao Jing of China, at a speech in Islamabad said the China – Pakistan economic corridor is having a positive impact on the Pakistan economy.

Dollar Investors Increase Odds Of A Rate Cut

The US dollar traded broadly lower in the previous session and was under pressure again in early trade on Tuesday as coronavirus fears are causing investors to reassess the probability of a rate cut. The hit to the global economy from the coronavirus outbreak is looking potentially worse than initially feared. As a result, investors are raising the odds of an interest rate cut by the Federal Reserve.

According to the CME Fedwatch, market participants are now seeing a 23% chance of a rate cut in March and a 50% possibility of a rate cut in April as investors attempt to gauge the economic impact of coronavirus.

The number of cases globally of coronavirus has now passed 80,000, with the numbers outside of China climbing rapidly, particularly in South Korea and Italy.

The dollar could find support later today with the release of US consumer confidence data. Analysts are expecting an up tick in consumer morale to 132, up from 131.6.

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