The Pakistani Rupee is picking up off a two week low struck in the previous session. The Rupee weakened to 161.53 on Wednesday, before settling -0.5% at 161.13.
At 10:15 UTC, USD/PKR is trading -0.6% at 160.05. This is towards the lower end of the daily traded range of 159.95 – 161.15.
PKR: SBP Projections Under the Spotlight
The Pakistani Rupee is advancing despite broad risk off sentiment and more dismal data. According to the latest data from the Pakistan Automotive Manufacturers Association (PAMA), Pakistan’s auto industry witnessed its worst month for car sales ever, with 0 sales recorded in April. The data adds to mounting evidence of the paralyses experienced by the economy last month.
Investors will now look ahead to the State Bank of Pakistan’s monetary policy meeting tomorrow. The meeting comes as concerns continue to grow over the health of the Pakistan economy as lock down measures are gradually eased.
The central bank has already cut rates by 4.25% in March and April taking the rate from 13.25% to 9%. The most recent cut was on 16th April when the SBP slashed an additional 200 basis points off the rate. Some analysts believe that the SBP are in a position to cut rates further in light of the pandemic crisis and falling inflation.
Investors will be paying particular attention to the central bank’s projections for the Pakistan economy. In the last meeting the SBP had said that it expects the economy to contract by -1.5% in fiscal year 2020, before recovering to grow 2% in 2021.
USD: US Initial Jobless Claims Up Next
The US Dollar is trading on the font foot versus its major peers as investors seek out its safe have properties following a reality check from Federal Reserve Chairman Jerome Powell. Jerome Powell warned of prolonged economic weakness and called for more fiscal stimulus to help the US economy on its long road to recovery.
Investors will now turn their attention to the US initial jobless claims report. Analysts are expecting another 2.5 million Americans to have signed up for unemployment benefit in the week ending 8th May. This would take the total to 36 million Americans applying for jobless claims since the 21st March when the coronavirus crisis started. This equates to around a quarter of the working population in the US.