- Pakistan Rupee (PKR) drops as foreign investors withdraw from Pakistan debt market
- Imports increase 30% boosting demand for USD in Pakistan
- US Dollar (USD) falls versus major peers in risk on trading
- Vaccine optimism overshadows rising covid cases
The US Dollar Pakistani Rupee (USD/PKR) exchange rate hit a fresh all time high of 168.50 on Tuesday. The pair has surged 0.6% today extending gains for a third straight session. The pair is already trading 1.2% higher this week.
The Pakistani Rupee is trading at all time lows as demand for US Dollars by importers increases and as foreign investors continued to exit Pakistan’s debt market.
As the Pakistan economy continues to reopen following the coronavirus lockdown, imports are picking up once again which is increasing demand for the greenback by importers
Data showed that Pakistan imports rose 30% to $3.7 billion in June 2020 compared to the previous month.
Data also showed that foreign investors have pulled out of a total of $36 million from Rupee dominated Pakistan Investment bonds and T-bills over the past week.
The Pakistan Rupee has fallen 8% so far this year making it the weakest performing Asian currency. The weakening Rupee could cause another round of price hikes and lift inflation
Last week Fitch Solutions predicted that the Rupee could drop further in value falling to 171.00 in 2021.
The US Dollar traded lower versus its major peers as investors sought riskier assets and currencies over the safe haven US Dollar. Risk appetite has increased after the EU agreed a €750 billion stimulus package and after encouraging vaccine news from Oxford University and AstraZeneca.
The report showed that 100% of these given the vaccine candidate produced a strong immune response. Crucially there were no adverse side effects. This means that another step towards preventing coronavirus has been achieved.
The upbeat vaccine news is overshadowing reports that the number of coronavirus cases in California has reached a new record. Almost 12,000 new daily cases were recorded on Monday, with the total rising to 400,000. Fears are growing that with more areas going back into lock down, economic data could start to deteriorate after a solid rebound from the March / April lows.