The US dollar is higher against the Pakistani rupee on Wednesday.
- Pakistan’s Khan downplays riff with ally Saudi Arabia
- Federal Reserve minutes released 2pm ET (Washington time)
- Dollar attempts recovery from 28-month low
USD/PKR was higher by 62 pips (+0.37%) to 168.125 as of 3pm GMT. This week the dollar-Indian rupee exchange rate is higher by +0.30%.
The currency pair snapped a 3-day losing streak to turn higher on the week thanks to Friday’s gains.
PKR: Pakistani rupee falls amid Saudi tensions
The weakness in the Pakistani rupee pre-dates today’s small sign of US dollar strength as markets question the country’s ability to withstand the economic shock of the pandemic. Today a geopolitical riff between Pakistan and ally country Saudi Arabia over Kashmir pulled the rupee lower.
Pakistan had called for Saudi Arabia to take a tougher stance with India over what it said were human rights abuses in the region. The demands had reportedly soured relations and the Pakistani army chief was in the Kingdom to calm the waters. Pakistani Prime Minister Imran Khan downplayed the differences in an interview on Tuesday.
The latest forecast for global trade from the World Trade Organisation via its ‘goods trade barometer’ seemed to impact some Asian currencies, including the Pakistani rupee. The WTO said that indicators it follows suggest only a ‘partial’ uptick in world trade in Q3.
USD: Consumer sentiment rises in August
Minutes from the latest Federal Reserve meeting is the first big event of the week for the US dollar, which fell to 28-month lows yesterday against a basket of currencies. The Fed held rates steady so traders will parse the minutes to judge the Fed’s outlook for growth, employment and inflation to judge the next policy move.
Economic data has improved through July with the help of huge fiscal assistance from the American government. Now the Fed is in the difficult position of trying to decide monetary policy when the level of fiscal support is still unknown without another coronavirus stimulus bill.