- Pakistan Rupee (PKR) under pressure, paring gains from Tuesday
- IMF warns of worse contraction of -5.7% in emerging markets vs -5% initially forecast
- US Dollar (USD) rises on safe haven flows as 2 leading vaccine candidates see trials paused
- PPI due on quiet US economic calendar
The US Dollar Pakistan Rupee (USD/PKR) exchange rate is advancing on Wednesday, paring losses from the previous session. The pair settled down -0.5% on Tuesday at 162.89, at the low of the day. At 09:15 UTC, USD/PKR trades +0.2% at 163.20 as the pair continues to hover around 5-month lows.
The IMF upwardly revised its global economic forecast for 2020. In its latest World Economic Outlook the IMF forecasts a -4.4% contraction, an improvement of the -4.9% contraction forecast in June.
The IMF highlighted that richer nations and China have rebounded more quickly than initially expected from the coronavirus lockdown hit. However, the IMF also highlight the extremely challenging situation faced by emerging markets, which are struggling to reopen their economies owing to the continued spread of the virus. Emerging markets excluding China are expected to see a deeper contraction of -5.7% this year, worse than the -5% forecast back in June.
The US Dollar is trading higher versus its major peers as investors seek out its safe haven properties. News that two leading Covid-19 vaccine candidate trials were being paused over safety concerns unnerved investors.
Yesterday Johnson & Johnson announced that they were halting their covid vaccine candidate trial after and unexplained illness in a participant. Eli Lilly & Co have also announced that it too is pausing the clinical trial of its covid antibody treatment on safety concerns. These delays mean any potential rapid solution to covid is being pushed back.
Also boosting the US Dollar is the lack of progress towards a US fiscal stimulus bill. Hopes of a fiscal stimulus deal being achieved before the elections are fading after the Democrats latest proposal falls short of expectations.
The US economic calendar is quiet. Producer price index data will provide further clues on inflation at wholesale level.