- Pakistani Rupee (PKR) extends losses
- Fitch forecasts the current account deficit to widen to 1.7% of GDP
- US Dollar (USD) advances as European currencies drop
- No data is due leaving sentiment to drive the greenback
The US Dollar Pakistani Rupee (USD/PKR) exchange rate is gaining altitude on Wednesday, adding to gains from the previous session. The USD/PKR settled +0.24% on Tuesday at 166.00. At 09:30 UTC, USD/PKR trades +0.24% at 166.24.
International ratings agency Fitch warned that Pakistan’s current account deficit could widen to 1.7% of GDP in the coming fiscal year FY2021 as remittances decline offsetting gains from softer oil prices. Fitch said that it expects remittances to fall despite the economic recovery in recent months. The agency added that a high debt to GDP ratio could hinder Pakistan’s ability to address social spending needs.
Pakistan had seen its current account deficit decline from a 6.1% of GDP high in 2018 to just 1.1% in fiscal year 2020. It had also built its forex reserves in a bid for a more market led exchange rate.
The US Dollar is advancing amid deep decline in European currencies, particularly sterling on Brexit troubles. A steep selloff in US big tech stocks overnight spread to the wider equities creating a risk averse climate in the US session. However, for now that appears to be easing as European stocks advance.
Investors are managing to shrug off news that AstraZeneca will pause all its coronavirus vaccine trials following an adverse reaction in one participant. In vaccine trials it is standard procedure to halt the trial under such circumstances, for independent review. The market seems satisfied with the response. This means risk sentiment is improving, gains in the US Dollar are being capped whilst the sell off in riskier assets and currencies, such as the Rupee is also being limited.
There is no high impacting US data due today meaning that sentiment will drive the US Dollar. Tomorrow investors look towards US jobless claims figures for further clues over the the health of the economic recovery.