The Pakistani Rupee weakened further versus the US Dollar on Thursday, for third straight session. The Rupee lost 0.1% of its value versus the greenback on Wednesday and closed the session at 166.84.
At 10:15 UTC, USD/PKR is trading at 167.54 a 0.4% move higher on the day. The pair is trading at the top end of its daily trading range of 166.50 – 167.55.
SBP Slices 0.5% Off GDP Forecasts
The Rupee is under pressure as coronavirus risks dominate. The State Bank of Pakistan revised down its projection for economic growth by 0.5% to 3% for the current fiscal year after coronavirus infection cases started to slowly rise. The central bank advised that GDP is likely to be revised downward further. However, the SBP didn’t hint as to the extent to which the GDP forecast could weaken.
Global institutions have recently predicted weak levels of growth for Pakistan. The World Bank anticipated negative growth of -1.3% in Pakistan’s economy for the first time in 68 years.
The International Monetary Fund also warned today that economic growth in Asia will grind to a half owing to the pandemic. The IMF predicted that the coronavirus outbreak will have an unprecedented impact on the region’s service sector and exports. The World Bank had previously forecast that Pakistan’s exports could contract by -19.7% in the current fiscal year compared to the previous one.
The dire data and forecasts add to the risk off sentiment driving demand away from riskier currencies such as the Rupee whilst boosting flows to safe haven currencies such as the US Dollar.
US Initial Claims Up Next
The US Dollar has been benefiting from safe haven flows amid disappointing US corporate earnings and dismal US economic data. On Wednesday, data from the US Commerce Department showed how the pandemic had altered and curbed Americans’ spending habits. US retail sales plunged -8.7% in March its largest decline since records began in 1992. The data raised fears that the lock down could be having a larger economic hit than initially feared.
Today investors will look towards US initial jobless claims data. Analysts are forecasting 5.1 million Americans will sign up for unemployment benefits in the week ending 10th April. This will take the total over 4 weeks to 21 million. A weak reading could boost demand for the US Dollar.
