Whilst the US dollar was moving lower versus its major peers, it gained ground against the Pakistan Rupee. The USD to PKR exchange rate advanced 0.25% at the start of the week.
On the open markets USD/PKR hit 154.51 after opening the session at 154.42. As of 10:21 UTC the pair traded a range of 154.1 to 154.52.
USD/PKR: Pakistan Rupee Falls As Border With Iran Closed
The Pakistani rupee edged lower as coronavirus fears increased. The number of coronavirus cases in Pakistan has now increased to 4. One of the cases was in Karachi, the country’s economic hub, whilst two cases were reported in Islamabad. Pakistan closed its border with Iran on Sunday. Iran is at the epicenter of the outbreak in the Middle East, with a total of 43 deaths reported so far.
The fears is that Pakistan, like many South Asian countries lack the necessary infrastructure to deal with a large scale outbreak of the virus. The latest figures come after warnings from the IMF and various economists on the potential impact of coronavirus on the Pakistan economy, which is fragile to start with. Any downturn in the global economy is expected to hit Pakistan exports. Furthermore, foreign exchange reserves in the country are unlikely to be sufficient to sustain the Pakistan economy in the face of a liquidity crunch.
Fed To Cut Rates? Manufacturing Data Up Next
The US dollar is trading broadly lower at the start of the week as investors become increasingly certain that the Federal Reserve will cut interest rates when it meets in March. According to the CME Fedwatch the probability of the Fed cutting rates has jumped to 95%, up from 23% a week ago.
The increased likelihood of a rate cut comes after Federal Reserve Chair Jerome Powell hinted on Friday that he would cut interest rates in a bid to support the US economy in the face os risks posed by the coronavirus outbreak. However, he also added that he considered that the US economy was in good shape currently.
Today investors will continue digesting coronavirus headlines. Attention will also move towards the release of the US ISM manufacturing PMI. Analysts are expecting the sector to remain in contraction at 50.5, whereby 50 separates expansion from contraction.