The Pakistani Rupee is advancing versus the US Dollar on Wednesday, after trading flat in the previous session. The Pakistani Rupee settled at 160.50 on Tuesday.
At 10:15 UTC, USD/PKR is trading -0.25% at 160.10. This is approximately mid-way between the daily traded range of 159.50 – 160.77 as investors digested NAC’s GDP forecast and look ahead to the FOMC minutes later today.
NAC Forecast -0.38% Contraction
The Pakistan Rupee is showing signs of resilience even as the economy slips into contraction for the first time in 68 years. According to the National Accounts Committee (NAC), Pakistan’s economy contracted by 0.38% in the outgoing fiscal year (ending 30th June) owing to the adverse impact of the coronvirus outbreak and economic stabilisation policies, which weighed on the industrial sector well before the coronavirus outbreak.
The NAC said that the agricultural sector grew 2.7% across the year, the industrial and service sectors contracted, dragging down overall growth.
This will the first contraction since 1951/2. However, the rate of contraction estimated by the NAC is milder than the -1.5% contraction that the International Monetary Fund (IMF), World Bank (WB), finance ministry and State Bank of Pakistan predicted.
FOMC Minutes Unlikely To Reveal Anything New
The US Dollar is trading broadly flat versus its major peers amid a fragile, mixed mood in the market as optimism surrounding a potential vaccine faded. A report on STAT, a medical website cast doubt over Moderna’s vaccine saying that insufficient evidence had been submitted to determine the efficacy of the vaccine.
Investors will now look ahead to the release of the minutes from the latest Federal Reserve monetary policy meeting. This was the April meeting where the Fed kept rates on hold. Investors will be scrutinising the minutes closely for clues as to any changes in policy tools used by the Fed to support the US economy during the coronavirus crisis. Any mention of negative interest rates will grab a lot of attention.
However, given Federal Reserve Chairman Jerome Powell’s appearances this week both on TV and before the Senate banking committee, the minutes are unlikely to reveal anything new.