- Pakistani Rupee declines as risk sentiment declines
- Coronavirus pandemic hit to consumers laid bare in report with 54% of Pakistani’s facing pay cuts or layoffs.
- US Dollar rises on safe haven flows despite signs of a strong rebound in the US economy
- US Dollar Pakistani Rupee (USD/PKR) exchange rate rebounds back over 167.00
The US Dollar Pakistani Rupee exchange rate struck a 2 week low on Monday of 165.87, before settling -0.7% at 166.30. At 09:15 UTC, USD/PKR trades +0.5% at 167.25.
Risk sentiment is on the decline on Tuesday, as investors once again shift their attention to rising coronavirus cases. Globally there are over 11.5 million known coronavirus cases, whilst the death toll is approaching 550,000. In Pakistan, there are 235,000 confirmed cases, although the death toll remains low at 4,839.
The impact of the coronavirus lockdown on consumers in Pakistan was unveiled in a report by Dun & Bradstreet Pakistan and Gallup Pakistan. The joint report revealed that half of the working class in the survey had taken a pay cut or lost their job as a result of the pandemic. The report supported views that millions of Pakistan jobs have been lost as business couldn’t operate during lockdown.
Due to job insecurity consumer spending has shifted from non-essential items to essential items, a trend that has been mirrored across the globe. On a more positive note, the majority of those questioned believed that the situation will normalise within the coming 6 months.
Safe haven flows into the US Dollar are on the rise on Tuesday, despite impressive data in the previous session. US ISM non-manufacturing PMI soared to 57.1 in June. A strong rebound from May’s 45.5 reading. The level 50 separates expansion from contraction.
The data shows that the US economy’s recovery is in full swing. However, investors fear that the spiralling cases across the sunbelt could see this recovery knocked in the coming weeks.
Looking ahead investors will focus on US JOLTS job opening data, which measures job vacancies is expected to slip to 4.85 million in May, down from 5.06 million in April.
