The Pakistani Rupee is falling versus the US Dollar for the third straight session on Wednesday, as risk sentiment remains fragile amid ongoing fears surrounding the coronavirus outbreak and its impact on the global economy.
At 10:15 UTC, USD/PKR is trading at 158.60 after opening the session at 157.75. It is trading at the upper end of today’s trading range of 156.33 – 158.80.
Pakistani Rupee Under Pressure Despite Import Duty Cuts
The Rupee has been under pressure in recent sessions as investors ditch perceived riskier currencies, such as the Pakistani Rupee, in favour of safe haven currencies. Flows into “safer” currencies are favoured as fears surrounding coronavirus and its potential impact on the global economy escalate.
Sentiment is dominating trade and the Pakistani Rupee fell despite plans being unveiled to remove duties on many raw materials used by exporters. This is a move to make exports more competitive in the region and to help the Pakistani economy advance. The Pakistan economy is seen expanding at 2.4% in the year through to June. This would mark its weakest pace of growth in more than a decade.
US Dollar Dips On Trump’s Silence
The US Dollar is trading higher versus the Pakistani Rupee; however, it is trading broadly lower compared to its other major peers for two reasons.
Firstly, there is growing scepticism about a fiscal stimulus package from Washington to shore up the US economy. Whilst late on Monday Trump had promised a “major” and “very dramatic” economic support package, details have been slow coming through. In fact, the silence from the White House since that initial announcement suggests that there could be delays to such a package.
Secondly, investors are broadly expecting the Federal Reserve to cut interest rate when it meets for its scheduled monetary policy meeting later this month. This would be the second rate cut in March, after the Fed slashed rates by 50 basis points last week in an attempt to shore up the economy ahead of the coronavirus hit which is expected in the coming days and weeks.
US Inflation data is unlikely to attract much attention, given that he data was from before the oil price crash and the coronavirus escalation.