- Pakistani Rupee (PKR) rises on broader improved market mood
- SBP has warned over impact of coronavirus on economy
- Safe haven US Dollar (USD) broadly lower despite riots continuing in US
- At 10:15 UTC, USD/PKR is trading -0.1% at 165.25
The Pakistan Rupee is showing resilience on Wednesday after four straight sessions of losses. The Rupee settled on Tuesday -1.1% lower versus the US Dollar at 165.45, marginally off the fresh 5 -week low of 166.00 reached earlier in the session.
At 10:15 UTC, USD/PKR is trading -0.1% at 165.25. This is towards the upper end of the daily traded range of 163.85 – 165.45.
The Pakistan Rupee is finding some support from a broad risk on climate in the financial markets. Investors are remaining focused on the easing of lockdown measures and reopening of economies across the globe.
As risk appetite increases, investors are emboldened to buy into riskier currencies and assets such as the Pakistan Rupee. Pakistan’s equity index the Karachi 30 is also trading in the green.
The Rupee has been under heavy selling pressure after a report from the State Bank of Pakistan, released earlier in the week, highlighted the impact that the coronavirus pandemic is expected to have on the economy.
The report made for grim reading as covid-19 affects trade, investment and remittances, as well as foreign demand. The report said that it expects unemployment to soar as many businesses close.
The safe haven US Dollar has been losing ground versus its major peers across the week, as reopening optimism has overshadowed rising civil unrest on the streets of America.
Riots and protests continue across the US following the death of black George Floyd whilst being arrested by white police in Minneapolis. Trump has threatened to bring the military in to control the protests, however he has not yet followed through on his threat.
Investors will now turn their attention to US ADP private payroll data. Analysts are expecting 9 million fewer jobs to be reported in May in the private sector. Whilst the is a huge number, it is also a vast improvement on the 25 million fewer jobs reported in April. Investors are expected to continue focusing on the positive element of the data, the massive rebound, rather than the colossal number of Americans without a job and the impact that has on the US economy.
