- Pakistan Rupee (PKR) drops on safe haven outflows on covid strain fears
- Oil plunges 5.7%
- US Dollar (USD) rises in risk off trading
- US Congress to agree $900 billion stimulus package
The US Dollar Pakistan Rupee (USD/PKR) exchange rate is advancing at the start of the week, extending gains from Friday. The pair closed +0.1% higher on Friday at 160.00. However, across the previous week the pair traded flat. At 10:30 UTC, USD/PKR trades +0.5% at 160.60 at the high of the day.
Risk off trading is hitting demand for riskier assets and currencies such as the Pakistan Rupee, whilst boosting demand for the safe haven US Dollar.
Concerns over a new strain of covid which is causing a surge in cases in the UK is hitting risk appetite across the globe. The spread of the new variant in the UK is out of control. It remains to be seen whether the vaccines that have been developed are effective over this new strain.
Investors fear tighter global lockdowns in the coming weeks as countries brace themselves for the spread of this mutation.
Global stock markets are dropping lower reflecting the risk off mood. Pakistan’s domestic equities fell lower. The Karachi benchmark index trades -0.9% lower heading towards the close. US stock futures are trading over 2% lower.
Oil prices are dropping sharply amid fears over more travel bans on the back of the new virus strain. West Texas Intermediate trades -5.7% lower in the European session at $46.4
The US Dollar is rising as investors seek out its safe haven properties. Covid fears are overshadowing vaccine optimism and news that that US Congress has agreed as covid rescue bill.
The House and the Senate are expected to vote on the $900 billion pandemic relief bill later today. The bill will be the second largest rescue package in the history on the US and includes direct cash payments to Americans as well as provisions for the vaccine rollout. Both chambers are expected to pass the bill easily.