- Asian Development Bank sees +2% GDP in FY2021
- US Dollar declines vs major peers on rising risk appetite
- Chinese retail sales rise for the first time this year
The US Dollar Pakistani Rupee (USD/PKR) exchange rate is extending gains for a second consecutive day on Tuesday. The pair settled +0.2% at 165.65 in the previous session. At 09:30 UTC, USD/PKR trades +0.3% at 166.15.
The Asian Development Bank (ADB) revised its outlook for the Pakistan economy, forecasting a broad economic recovery for Pakistan in fiscal year 2021 (FY).
The ADB sees the economic impact of coronavirus subsiding towards the end of 2020 (Q2 fiscal year 2021) with global conditions normalising and economic sentiment improving.
The ADB is expecting the Pakistan GDP to reach +2% in FY2021. The agricultural sector will help to underpin growth and industrial expansion will also improve in FY2021 according to the ADB. With improvements in agriculture and industrial sectors, combined with rising domestic demand, the service sector should also contribute to growth.
The US Dollar is trading lower versus its major pees amid a risk on mood in the market. Vaccine optimism, deals on Wall Street and upbeat Chinese data are boosting risk appetite, dragging on demand for safe havens such as the US Dollar.
Chinese data revealed that the economic recovery in the world’s second largest economy continued in August. Industrial production increases +5.6% in August compared to the previous year. This marked its fifth straight month of growth.
Chinese retail sales rose for the first time this year as Chinese consumers stepped up spending following the coronavirus crisis. The consumer recovery in China has taken significantly longer to pull through than the industrial recovery. Retail sales +0.5% compared to a year ago. However, sales are still down -8.6% so far this year.
Attention will now turn to the US Federal Reserve monetary policy meeting tomorrow. The Fed is not expected to change monetary policy. However, the market will be looking for further clarification over the new average inflation target approach.