The Pakistani Rupee is strengthening against the US Dollar on Wednesday, paring losses from the previous session. On Tuesday the Pakistani Rupee closed down at 159.45, after opening the session at 158.20.
At 10:15 UTC, USD/PKR was trading at 158.37, after having spiked to 161.75, amid improved risk sentiment across global financial markets.
US Dollar Eases As Risk Sentiment Improves
Risk sentiment remains elevated on Wednesday after a breakthrough in the US Senate over a $2 trillion dollar stimulus package. The rescue package combined with the Federal Reserve’s intervention aims to cushion the US economy from the coronavirus impact. The increasingly stringent measures that are being implanted to protect US citizens from the virus as causing demand for goods and services to evaporate.
The historic rescue plan includes $500 billion which can be used to back loans and in assistance to companies, including $50 billion for loans to US airlines, state and local governments. $350 billion is to aid small businesses. For individuals the package includes direct payments to lower- and middle-income Americans. The Senate is expected to vote on the historic sized deal later today.
To put the size of the deal in perspective, it dwarfs the $800 billion Obama stimulus package agreed 5 months after the financial crisis.
News of the rescue package lifted sentiment. The US stock market soared in the previous session in its best day in decades. The Dow Jones rallied 11.4% as investors brought into riskier assets and US futures are pointing to another strong start on the open.
National State Of Emergency In Pakistan
The improvement in risk sentiment is also helping to lift the Pakistani Rupee today. Although there are questions as to whether the lift in sentiment can be maintained.
Coronavirus is not the only problem for Pakistan today. Pakistan has declared a nationwide emergency as swarms of locusts wreak havoc in the agricultural heart of Pakistan. This is destroying the cotton crop, which is an important cash crop in Pakistan. According to the Economic Survey of Pakistan cotton related products contribute to 10% of the country’s GDP and 55% of the country’s foreign exchange earnings.