- Pakistani Rupee (PKR) strengthens as exports show signs of recovery
- US Dollar (USD) neutral as sentiment remains mixed following strong US and Chinese numbers, but rising US covid-19 numbers
- Low liquidity as US is closed for a public holiday in observance of Independence Day
- US Dollar Pakistani Rupee exchange rate (USD/PKR) trades close to weekly low
The Pakistani Rupee is paring losses from the previous session. At 09:15 UTC, USD/PKR trades -0.6% at 166.85. This is towards the lower end of the daily traded range of 166.2 – 168.25.
According to the Prime Minister Imran Khan’s adviser on Commerce, Abdul Razak Dawood, Pakistan exports are showing clear signs of recovery in the wake of the coronavirus crisis. The export sector received a notable boost since being permitted to export personal protective equipment (PPE). This was evident in the surge in June exports.
Traditional export items such as clothing and textiles were also showing tentative signs of improving. As countries across the globe ease lockdown measures, foreign demand is starting to pick up again. Even so, government policies are expected to drive geographical and product diversification in exports.
Strong Chinese service sector data overnight is also lifting the Rupee. Activity in China’s service sector increased to its highest level in 3 decades. China is Pakistan’s largest trading partner. Therefore, a strengthening Chinese economy is also beneficial for the Pakistan economy.
The US Dollar is trading flat in what is expected to be a quiet trading day given the US public holiday.
Risk sentiment is mixed keeping the safe haven US Dollar neutral. On the one hand, encouraging macro data has boosted optimism of a speedy economic recovery from the pandemic. 4.8 million jobs were created in the US in June. 50% more than the 3 million that analysts had pencilled in.
The rate of unemployment also improved, falling by a more than expected to 11.1%, down from 13.3% in May.
However, the rising number of coronavirus cases in the US is weighing on sentiment. The US recorded over 50,000 new cases for a second day running. The overriding fear is that the rapid reopening of the US economy will grind to a halt as areas roll back the reopening measures to prevent the further spread of the virus.