- Pakistani Rupee (PKR) slips even as SBP reports that adverse economic impact of covid has been contained.
- Pakistan’s SPI weekly inflation indicator see 0.31% increase
- US Dollar (USD) falls versus major peers as fears over the health of the US economy dominate amid rising covid numbers
- US GDP dives -32.9% in Q2 YoY
The US Dollar Pakistan Rupee exchange rate is extending gains for a second consecutive session. The pair settled on Thursday +0.2% at 166.72. At 09:00 UTC, USD/PKR trades +0.45% at 167.48, this is at the upper end of the daily traded range of 165.87 – 167.75.
The Pakistan Rupee was out of favour despite the State Bank of Pakistan saying that the adverse impacts of coronavirus have been contained.
In its third quarterly report, the central bank stated that successful stabilisation measures had resulted in macroeconomic improvements in the period running from July – February FY20. This, the SBP reported provided a cushion against the covid impact and economic downturn faced from March 2020 onwards.
In other news the Sensitive Price Index (SPI) – a weekly inflationary indicator, for the week ending 29th July recorded a 0.31% increase. The rise was mainly due to an increase in prices of food items such as tomatoes, wheat and sugar.
The US Dollar is selling off sharply versus its major peers The greenback trades at a 2 year low versus a basket of currencies (USD Index). The currency is on track for its worst monthly performance in over 10 years. Fears that the US economy is being hit by a second wave of coronavirus is dragging heavily on the Dollar.
According to Federal Reserve Chair Jerome Powell, high frequency data shows that the increase in coronavirus infections since mid-June has curbed consumption, sending the US economy downhill.
Data in the previous session showed that the US economy contracted 32.9% on an annual basis in the second quarter, the worst economic slump since the Great Depression.
Whilst data had been showing signs of improving since then, high frequency data is starting to tell a different story, that the US economic recovery is losing momentum. US initial jobless claims rose compared to the previous week, and continuing claims stalled at over 17 million suggesting the labour market recovery is stuttering.
Today investors will look ahead to personal consumption expenditure figures and consumer sentiment.