- Pakistani Rupee (PKR) trades under pressure with SBP rate announcement in focus
- Central Bank is not expected to adjust rates which are at 7%
- US Dollar (USD) advances on safe haven flows
- Rising covid cases, particularly in Europe, are hitting risk sentiment
The US Dollar Pakistani Rupee (USD/PKR) exchange rate is trending higher on Monday, paring losses from last week. The pair settled on Friday -0.25% across the week at 165.27, after trading within a familiar range. At 09:45 UTC, USD/PKR trades +0.6% at 166.25. This is at the top end of the daily traded range.
The State Bank of Pakistan is due to announce its monetary policy for the next two months today. The scheduled meeting of the committee was due in July. However, the SBP postponed the meeting given that it had already taken numerous measures to support the economy.
The last meeting was held at the end of June. The central bank cut its interest rate by 100 basis points to 7% in an attempt to cushion the economy from the coronavirus economic hit.
Analysts are not expecting the SBP to move on interest rates this month, instead keeping them steady at 7%.
The US Dollar is gaining ground across the board amid rising risk aversion. Concerns over increasing coronavirus cases, particularly in Europe is driving investors towards the safe haven greenback. Lockdown restrictions are tightening in major cities across Europe, which will hamper the economic recovery. As a result, the safe haven US Dollar is looking more attractive to many investors. Meanwhile risky stocks are falling across the board with European stock markets showing losses of over 3% and US futures pointing to 2% declines.
Concerns over Congress’ failure to agree to additional fiscal stimulus had been dragging on demand for the greenback through the Asian session. However, this is now being pushed aside as investors grow increasingly concerned about the global economic outlook amid rising covid cases.
There is no high impacting US data to distract investors today. This means that sentiment could drive the greenback until some Federal Reserve policy makers speak later today.