• Pakistani Rupee (PKR) advances as inflation records at 8.2%
  • Inflation could advance following petrol price hikes late last month
  • US Dollar (USD) moves higher versus major peers, on safe haven flows, as covid-19 cases jump by 60,000
  • US Producer price index and coronavirus statistics in focus at the end of the week

The US Dollar Pakistani Rupee (USD/PKR) exchange rate is falling lower for a third straight session. The pair settled on Thursday -0.1% at 166.95.

At 09:15 UTC, USD/PKR trades -0.5% at 166.15, this is at the lower end of the daily traded range as the pair continues to fall away from its all time high of 168.45. USD/PKR is on track the lose -0.8% across the week, snapping a seven-week winning run.

According to the State Bank of Pakistan, inflation as measured by the consumer price index recorded 8.2% growth year on year in May, down slightly from 8.5% increase in April. On a monthly basis inflation increased 0.3%, a vast improvement on last month’s -0.8% decline.

Recently announced petrol price hikes are expected to add more inflationary pressures going forward. Petrol prices increased by more than Rs25 in a single day on 26th June.

Earlier in the year, in January, Pakistan experienced a 12 year high in inflation at 14.6%, prompting the State Bank of Pakistan to increase interest rates to 13.25%. Since then the central bank has cut interest rates to 7% in an attempt to provide liquidity to struggle businesses during the coronavirus crisis.

The US Dollar is moving higher versus its major peers as investors seek refuge in the safe haven greenback. The number of new daily coronavirus cases has reached a fresh record high jumping by 60,000 in one day. Investors are fearing that surging cases could undermine the fragile economic recovery in the world’s largest economy.

Looking ahead the US session is expected to be relatively quiet, with just factory gate inflation data on the economic calendar. Analysts are expecting PPI to rise an unremarkable 0.1% month on month in June, after falling -0.1% in May.  US coronavirus statistics are also expected to drive sentiment.