- Pakistan Rupee (PKR) extends losses
- Exports return to pre-pandemic levels
- US Dollar (USD) hits fresh 2.5 year low vs major peers
- Federal Reserve monetary policy announcement in focus
The US Dollar Pakistan Rupee (USD/PKR) exchange rate is advancing on Wednesday for the third straight session. The pair settled 0.05% higher in the previous session at 160.10. At 09:15 UTC, USD/PKR trades +0.2% at 160.45.
According to the State Bank of Pakistan, exports have now recovered to pre-pandemic levels of $2 billion. The strongest recovery is seen within textiles, rice, cement and the pharmaceutical sector.
SBP Governor Reza Baquir also pointed out in his speech “Pakistan’s Response to Covis and Way Forward for an Inclusive Economic Recovery” that Pakistan must focus on competitiveness and reduce imports to further support local businesses.
He added that the Pakistan economy had not been hit so hard by Covid because the country had acted quickly and because the SBP took timely measures to halt bankruptcies.
According to the Asian Development Bank Pakistan’s economy is on the right path to recovery and growth of 2% is expected in the current fiscal year. This is just slightly below the SBP’s growth projection of 2.5%.
Whilst the US Dollar is advancing versus the Rupee it is falling versus its major peers. At the time of writing the US Dollar index trades -0.3% at a fresh 2.5 year low in risk on trade amid vaccine optimism, US fiscal stimulus hopes and ahead of the Federal Reserve monetary policy decision later today.
Investors are growing increasingly confident that Democrats and Republican lawmakers will reach agree a $748 billion bipartisan proposal before Christmas. This would be a direct injection of cash into the economy, which is desperately needed right now as prior benefits are due to expire at the end of the year.
Looking ahead the Fed are not expected to make any changes to monetary policy. Instead they are expected to hold steady and wait for further developments on the vaccine rollout and the fiscal stimulus negotiations in Congress.