- Pakistan Rupee (PKR) pares gains from the previous session after $505.5 million arrived from the World Bank
- US Dollar (USD) trends broadly lower versus its major peers amid growing concerns that covid will de-rail the economic recovery
- Federal Reserve not expected to move on policy
- Congress have so far failed to agree on further stimulus programme
The US Dollar Pakistani Rupee (USD/PKR) exchange rate is gaining ground on Wednesday after two straight sessions of losses. The pair settled on Tuesday -0.25% at 166.45. At 09:15 UTC, USD/PKR trades +0.3% at 167.00.
Yesterday the Rupee was well supported after the State Bank of Pakistan received $505.5 million from the World Bank as part of a financing agreement to provide financial support to the country. The support has been provided under Resilient Institutions for Sustainable Economy (RISE) Development Policy Financing. This objective is to enhance policy and framework to improve fiscal management.
The money helped boost foreign exchange reserves, lifting the Rupee on Tuesday. This comes after $250 million loan was approved last week by the Asian Infrastructure Bank AIIB to help boost Pakistan’s response to the coronavirus pandemic.
The US Dollar is trending southwards versus its major peers amid fears that the rising coronavirus numbers are hampering economic recovery. Additional stimulus from the US government has still not been agreed and US Treasury Secretary Steve Mnuchin in doubtful whether the Republicans and Democrats would agree a deal before the deadline on Friday. Friday is when the additional unemployment benefit support expires.
New daily coronavirus cases in the US are totalling 60,000 and 6 states seeing record new cases. Consumer confidence is fading and the recovery in the labour market has stalled. The picture in the US is deteriorating and for now there is no further fiscal stimulus.
Attention will now turn to the Fed as it gives its monetary policy announcement later today. The Fed is expected to hold steady on policy but stick with a dovish tone as risks to the economy grow. With dozens of new programmes rolled out since March to support the economy the Fed will want to hold fire and see how things evolve.