The US dollar Pakistani Rupee exchange rated pushed sharply higher to a high of 157.15, a 4-month high as panic spreads across global financial markets.
Pakistani Rupee Firmly Out Of Favour
The Pakistani Rupee is firmly out of favour out of favour as the new week begins. Investors are digesting not only the escalation of coronavirus cases across the globe but also an oil price war between Russia and Saudi Arabia. Fear is driving trading and investors are pulling out of riskier assets such as emerging market currencies.
After weeks of trying, OPEC failed to persuade Russia to increase output cuts in order to balance out the impact of coronavirus on the oil market. Saudi Arabia is not taking this lying down and has decided to pump out more oil from April, whilst also selling its oil cheaper. The result is Brent plunging to $30 per barrel and risk appetite taking a huge hit.
US Dollar Dives As Bond Yields Tank
Whilst the US dollar moved higher versus emerging market currencies, the dollar was sharply lower versus its major peers. The risk off sentiment is causing investors to pull their money from the US stock markets and turn to US government bonds in a flight to safety. The bond yield has dropped to the lowest level on record, dragging the dollar lower.
Investors have completely shrugged off Friday US non-farm payroll report. The data revealed that an impressive 275,000 jobs were created in February, well ahead of the 173,000 forecast. The level of unemployment ticked lower to 3.5%, down from 3.6%, suggesting that he US economy was in a good place in February.
However, it was at the end of February that the number of coronavirus cases escalated in the US. Us dollar investors are more concerned about what lays ahead with the negative impact of coronavirus on the economy.
The Fed cut interest rates by 50 basis points last Monday. Investors are expecting the Fed to act again and cut rates further which is dragging the dollar southwards.