The Pakistani Rupee is advancing versus the US Dollar on Monday, extending gains from the previous week. The Pakistani Rupee advanced 1.6% versus the greenback across last week, strengthening from 163.25 to close the week at 160.61.
At 10:15 UTC, USD/PKR was trading -0.2% lower at 160.10. This is approximately mid-way between the daily traded range of 157.25 – 163.36.
Loans & Locusts
The Pakistani Rupee is extending last week’s gains amid reports that Islamabad is launching an initiative which seeks to reschedule bilateral and multilateral loans. The broad aim of the initiative to reschedule loans of developing countries is to offset the negative hit to the Pakistan economy from the coronavirus crisis.
Pakistan’s exports have declined, whilst economic activity has ground to a halt owing to the coronavirus lockdown.
The Pakistani Rupee could come under pressure going forward as the finance ministry expressed concerns that an infestation of locusts could affect the wheat crop and cotton crop this year. In a monthly economic update released by the ministry, it was suggested that production targets may not be met owing to the scale of the locust problem.
The locust attack which has been gripping the county since late last year comes at the same time that Pakistan is trying to get to grips with the coronavirus outbreak.
US Dollar Gains Ahead of Factory Orders
US Dollar was trading broadly higher at the start of the week, although lower versus the Pakistani Rupee, as investors seek its safe haven properties. Risk aversion is dominating in the financial markets amid President Trump’s efforts to pin blame for the coronavirus outbreak on China and particularly on a laboratory in the province of Wuhan where the coronavirus outbreak started.
President Trump has threatened implementing trade tariffs on China in retaliation, stoking fears of a second round to the recently ended trade war. Last night, Mike Pompeo, US secretary of state reiterated Trump’s accusation, hitting risk sentiment at the start of the week.
Looking ahead, US Dollar investors will focus their attention of US factory orders, due to be released later today. Analyst are expecting factory orders to have declined -9.8% month on month in March, this is well down for a 0% change the previous month. Weak data could boost the US Dollar further on increased safe have trades.