- Pakistan Rupee (PKR) weakens above 160.00
- Moody’s sees growth remaining below pre-pandemic levels
- US Dollar (USD) trades flat versus major peers
- Joe Biden, Fed Powell & jobless claims in focus
After two sessions of trading flat, the US Dollar Pakistan Rupee (USD/PKR) exchange rate is advancing on Thursday. The pair settled at 160.00 for the second straight session on Wednesday. At 11:15 UTC, USD/PKR trades +0.3% at 160.50.
According to Moody’s Investor Services, economic activity in Pakistan will remain below pre-pandemic levels for now. However, the economy is expected to return to modest growth of 1.5% in fiscal year 2021 after contracting by -0.4% in fiscal year 2020 owing to the impact of the pandemic.
Moody’s said that high frequency indicators suggest that economic activity has already started to rebound. However, on going restrictions on movement to prevent the spread of covid will keep economic activity below pre-pandemic levels for some time.
Growth is expected to accelerate to 4.4% in 2022 as the global economy also continues its rebound lifting Pakistan’s exports further.
The US Dollar is holding steady on Thursday, pausing for breath after strong gains versus its major peers over the past few sessions. The US Dollar Index has rebounded from multi-year lows hit last week, boosted by expectations of huge additional stimulus from the Joe Biden administration.
President -elect Joe Biden is expected to announce $2 trillion stimulus package later today. This would be a substantial top up from the $900 billion relief package approved by Congress.
Expectations are growing of a stronger economic recovery this year on the back of more stimulus, raising the chances that the Federal Reserve could start tapering its bond buying programme sooner than thought.
Federal Reserve Chairman Jerome Powell is due to speak later. Investors will be listening carefully for any guidance over the possibility of tapering the bond purchases. Any clues could provide fresh direction for the US Dollar.
US jobless claims are also due to be released and are expected to stabilize below 800,000 as the US economy struggles with rising covid cases.