- Pakistan current account turned surplus as imports and exports declined
- Safe haven US Dollar (USD) broadly higher amid fears rising covid numbers will knock economic recovery
- US GDP, jobless claims & durable goods orders in focus
- US Dollar Pakistani Rupee exchange rate (USD/PKR) -0.2% at 167.25
After two consecutive days of losses, the Pakistan Rupee (PKR) is strengthening versus the US Dollar on Thursday. The Rupee settled in the previous session -0.2% at 167.80 after reaching a 3 month low of 168.25.
At 09:15 UTC, USD/PKR trade -0.2% as 167.25. This is approximately mid-way between the daily traded range of 166.2 – 167.8.
Pakistan’s current account has turned into a surplus of $13 million on May 20th according to the State Bank of Pakistan. This comes after the central bank announced a $530 million deficit the month earlier in April.
The difference between the government’s foreign income and expenditure turned positive at the expense of economic growth. A slowdown in both imports and exports pointed to a significant decline in economic activities owing to the covid-19 pandemic.
The US Dollar was trading higher versus its major peers as risk sentiment continued to sour. A resurgence of coronavirus in the US is prompting concern that new lockdown restrictions could be needed to bring the outbreak under control.
The US experienced 38,672 new daily coronavirus cases on Wednesday, led by accelerating outbreaks in Florida, California and Texas. Investors are growing increasingly concerned that the resurgence of covid cases could derail the economic recovery.
These fears are driving risk aversion, boosting demand for the safe haven US Dollar whilst riskier assets such as stocks are out of favour. The US stock market closed -2.5% in the previous session and is looking to extend those losses when markets reopen.
Attention will now shift to a triple hit of US economic data, including jobless claims, durable goods and US GDP figures.
Initial jobless claims are expected to increase by 1.3 million, only slightly down from last weeks 1.5 million. Continuing claims are also only expected to show a slight improvement. Durable goods orders are expected to rebound. Finally, GDP data is expected to confirm the US economy shrank -5% on an annual basis in the first quarter.