- Pakistan Rupee (PKR) weakens above 160.00
- Foreign exchange reserves -0.09% on the week
- US Dollar (USD) trends higher after Biden stimulus announcement
- US retail sales up next
The US Dollar Pakistani Rupee (USD/PKR) exchange rate is edging higher after closing flat for the third straight session on Thursday. The pair settled at 160.00 in the previous session. At 12:15 UTC, USD/PKR trades +0.3% at 160.55.
Risk off trading dented demand for the Pakistan Rupee. Rising covid cases and tighter restrictions across the globe, including China are unnerving investors, dampening hopes of a quick economic recovery. As a result, demand for riskier assets and currencies, such as the Pakistan Rupee are taking a hit, whilst demand for the safe haven US Dollar is on the rise.
According to the State Bank of Pakistan foreign reserves held by the central bank fell by -0.09% on a weekly basis. On 8th January reserves held by the central bank were $13,400 million, down from $13,412.3 the previous week.
The US Dollar is pushing higher across the board. The US Dollar Index, which gauges the greenback versus its major peers trades +0.3% at the time of writing.
US President elect Joe Biden last night announced at $1.9 trillion stimulus package to support the US economy. The plan will include new individual checks for Americans and could help limit the economic damage that the pandemic is causing.
The past week has seen expectations pick up that the Fed could look to taper its bond buying programme sooner on the back of the huge stimulus package announced by the Joe Biden administration. These expectations have boosted treasury yields and the USD across the week.
However, Fed Powell said last night that now was not the time to be considering the Fed’s exit. His comments came shortly after initial US jobless claims shot higher to 965,000 -the highest level in 5 months as US businesses continue to struggle under the strain of rising covid cases.
Today attention will turn to US retail sales.