• Pakistan Rupee (PKR) trades steadily
  • Pakistan inflation 8.9% in October
  • US elections in focus, still no clear winner, US Dollar (USD) volatile 
  • Senate could remain under Republican control

The US Dollar Pakistan Rupee (USD/PKR) exchange rate is ticking a few points lower on Wednesday paring some of the small gains from the previous session.  The pair gained 0.1% on Tuesday, settling at 159.85, towards the low of the day. At 10:15 UTC, USD/PKR trades down -0.05% at 159.77.

The US Dollar is seeing heightened volatility on Wednesday as investors remain focused on the US elections. Whilst there is no clear winner, Joe Biden appears to have the edge with 238 electoral votes whilst Trump has 213. However, everything depends on the key swing states which are still counting votes. Both candidates still have a path to the White House and the result is not likely to be known for several hours.

Congress is also on a knife edge with the Democrats not managing to flip as many seats as the polls had indicated in the Senate. This is key, because even if Joe Biden wins but fails to flip the Senate then political gridlock in Congress will likely continue. For the markets this means that the massive fiscal stimulus package is less likely to materialise than under a blue wave scenario. Investors are reining in stimulus expectations.

Looking ahead US ADP private payroll data will be in focus along with US ISM non-manufacturing figures ahead of Friday’s non farm payrolls.

In Pakistan inflation data is under the spotlight. Inflation remains elevated with the Consumer Price Index hitting 8.9% in October. The urban rural inflation gap widened to 4%, the highest ever since the rural inflation differential started to be recorded as food prices continue to surge.

Expectations are that food prices will ease over the coming months, which could help keep a cap on inflation.

Separately, Pakistan’s planning minister Asad Umar said that the country’s economy was on the right path to recovery, with strong exports, positive large scale manufacturing growth and revenues up.