- Pakistani Rupee (PKR) pares yesterday’s gains
- IMF warns over the covid crisis lasting longer than expected
- US Dollar (USD) rallies on safe haven demand as rising covid cases threaten to derail the global economic recovery
- US jobless claims data will be in focus, 843,000 initial claims expected
The US Dollar Pakistan Rupee (USD/PKR) exchange rate is trading higher on Thursday, paring losses from the previous session. The pair settled -0.4% at 165.37 on Wednesday. At 09:30 UTC, USD/PKR trades + 0.4% at 166.07.
The Pakistan Rupee is out of favour in a risk adverse environment. The International Monetary Fund gave a stark warning that the coronavirus crisis is lasting longer than expected and will take some countries years to return to growth. The IMF has provided $90 billion in financing to 79 countries, including Pakistan, since the health crises started.
Pakistan reported the single highest day covid cases since August, which is adding to caution. An additional 799 people tested positive over the past 24 hours.
The US Dollar is pushing higher versus most of its peers as covid and economic recovery concerns continue. Data in the previous session showed that the economic recovery in the US and in Europe was slowing. These fears were later fuelled by the US Federal Reserve, whose comments boosted safe haven demand.
US Federal Chair Jerome Powell said that the US economic recovery still had a long way to go. He added that there was a strong case for more fiscal stimulus. However, the possibility of a new rescue plan being agreed by Congress prior to the November election is now very small. This is unnerving investors, boosting demand for the safe haven US Dollar.
Attention will now turn to US jobless claims data. Expectations are for 843,000 Americans to have signed up for unemployment benefits last week. This is slightly down from 860,00 recorded previously. Any sign that the labour market recovery is also slowing could boost demand for safe havens and the US Dollar.