- Pakistan Rupee (PKR) weakens
- Current account records $662 million deficit
- US Dollar (USD) trades lower versus majors in risk outflows
- US jobless claims in focus
The US Dollar Pakistan Rupee (USD/PKR) exchange rate trades higher on Thursday after finishing flat in the previous session. The pair settled -0.0% at 160.10 on Wednesday. At 11:45 UTC, USD/PKR trades +0.4% at 160.75 at the high of the day.
Pakistan’s current account, which measures the difference between imports and exports, revealed a deficit in December after 5 straight months of surplus. The account deficit was recorded at $662 million and primarily stemmed from a jump in imports to over $5 billion in December. Analysts warn that growing import pressure could weaken the Rupee further.
The State Bank of Pakistan reported that imports such as oil and industrial raw materials grew on the back of the domestic economic recovery. Imports rose 27% or $1.22 to $5.02 billion in December compared to the same month last year. Exports and remittances were also up 8% and 16% year on year respectively in December 2020.
The current account deficit was downwardly revised by the central bank and is now expected to be in the range of 0.5% – 1.5% of GDP, down from 1-2%.
The US Dollar is trading higher versus the Pakistan Rupee but was trending lower versus its major peers amid risk on trading. The US Dollar Index trades -0.35%.
Optimism surrounding Biden’s $1.9 trillion covid stimulus package is lifting risk appetite whilst hurting demand for the safe haven greenback. US stocks markets it fresh record highs overnight. US futures are pointing to a stronger start on today.
Attention will now turn to US jobless claims data due later. Analysts are expecting 910,000 Americans signed up for unemployment benefit last week. This is down slightly from the previous reading of 965,000 a 5 month high.