- Pakistan Rupee (PKR) is set to end the week marginally softer
- Remittances hold over $2 billion for 6th straight week
- US Dollar (USD) rises in risk off trade
- Slow progress in US stimulus talks & rising jobless claims hit sentiment
The US Dollar Pakistan Rupee (USD/PKR) exchange rate is edging higher on Friday. The pair has traded roughly flat for the past two sessions, settling at 160.00. At 9:15 UTC, USD/PKR trades +0.1% at 160.12. The pair is on track to book mild gains of 0.2% across the week, after booking mild losses in the previous week.
According to the State Bank of Pakistan, workers remittances maintained strong momentum in November, recording the sixth straight month over $2 billion. Overseas Pakistanis sent home $2.34 billion in November, an increase of 2.4% compared to the previous month and a huge 28% increase compared to the same period a year earlier. Across the first 5 months of this fiscal year workers remittances have reached an unprecedented $11.77 billion, 26.9% higher than the same period last year.
The sharp improvement in figures is thanks to continued government and central bank efforts to formalize remittances under the Pakistan Remittances Initiative (PRI).
Risk off sentiment is dominating trade across the global financial markets, hitting demand for riskier assets and currencies such as the Pakistan Rupee, whilst lifting demand for the safe haven US Dollar. The souring mood in the market comes following slow progress by US Congress towards agreeing additional stimulus and amid growing evidence of the US labour market recovery reversing.
US applications for unemployment benefits soared last week, printing well above expectations and jumping to a three month high. Initial jobless claims rose 853,000 in the week ending 5th December, well ahead of the 710,000 the previous week and ahead of expectations of 725,000.
The data suggests that the recovery in the US labour market has stalled and is showing signs of reversing as covid cases surge and more business shutdowns to curb the spread of the virus.
Attention will now turn to US consumer confidence data due later today.