After declining sharply versus the US Dollar on Monday, the Pakistani Rupee was attempting to claw back some losses on Tuesday. As risk sentiment picks up demand for riskier emerging market currencies stabilises.
At 09:15 UTC USD/PKR is trading at 157.35 after opening the session at 157. 80. On Monday the pair jumped from 154.42 to 157.8 on the open market.
Riskier Currencies Back In Favour
The Pakistani Rupee is attempting to pare some losses from the previous session after being dragged sharply lower as panic selling gripped the global financial markets. Risk appetite crumbled on Monday as investors digested escalating coronavirus cases and an oil price war between Saudi Arabia and Russia.
Today, risk sentiment is improving which is encouraging investors to buy back into riskier assets such as emerging market currencies like the Pakistani Rupee.
The turnaround in risk sentiment comes after President Trump floated the idea of economic relief for workers in the face of a coronavirus slowdown and as Wuhan, the city and province at the centre of the coronavirus outbreak, reopens its boarders.
The number of coronavirus cases in China is also slowing significantly which is bringing optimism to the markets that this will be a short lived, if hard hitting issue.
Elsewhere Japan has also confirmed a second stimulus package to fight the coronavirus outbreak. Policymakers and governments across the globe are showing that they are prepared to prop up the global financial system, which is boosting confidence.
The Karachi 100 index is trading 1% higher today after a 3% sell off on Monday.
US Dollar Pushes Higher On Improved Sentiment
The dollar was trading lower versus the Pakistani Rupee in early trade on Tuesday. However, it was actually rebounding versus major peers after a steep decline on Monday. The risk on environment is lifting US index futures, bond yields and the dollar.
There is no high impacting US data due for release today. Investors will continue to monitor both coronavirus headlines, in addition to policymakers’ response. Sentiment is expected to remain the key driver of US Dollar in today’s session.
