- Pakistan Rupee (PKR) declines despite the current balance tipping into surplus for a 2nd month
- Rising remittances & lower import payments lifted the current account balance
- US Dollar (USD) on the rise following upbeat Fed
- US PMI data up next
The US Dollar Pakistan Rupee (USD/PKR) exchange rate is extending gains for a second day on Wednesday. The pair settled on Tuesday +0.5% at 166.05. At 07:15 UTC, USD/PKR trades +0.15% at 166.30. Mid way through the week, the pair is on track for weekly gains of 0.6%.
The Pakistan current account balance has turned into a surplus for the second straight month in August. The State Bank of Pakistan revealed that the Current account balance was $508 million and $297 million in July and August.
On a cumulative basis the current account balance reached a surplus of $805 million in Jul- August fiscal year 2021 compared to a $1.2 billion deficit recorded in the same period a year earlier.
The State Bank of Pakistan said that the strong surplus was owing to the solid rise in workers remittances and lower import payments.
The US Dollar is edging higher across the board again on Wednesday, trading at 2 month highs versus a basket of its major peers. The greenback is in demand following upbeat comments from Federal Reserve policy makers overnight.
Federal Reserve Chair Jerome Powell said that the US economy stood resilient throughout the covid pandemic, whilst Federal Reserve official Charles Evans said that the US economy had returned to 90% of pre-pandemic levels, adding that the Fed could consider raising interest rates before the 2% average inflation target is reached.
The US Dollar will now loo ahead to the release of PMI data later today. Analysts are expecting the readings to show that the US economic recovery continues at a steady pace. Expectations are for the service sector activity to tick marginally lower to 54.7 in September from 55. Meanwhile the manufacturing sector is expected to advance to 53.2, up from 53.1.