- Pakistan Rupee (PKR) weakens back over 160.00
- Fitch Solutions expects 1.1% GDP
- US Dollar (USD) rises on safe haven inflows
- US ISM manufacturing PMI to show solid expansion
The US Dollar Pakistan Rupee (USD/PKR) exchange rate is advancing at the start of the new week, paring losses from the previous week. The pair shed -0.2% on Friday settling at 159.60. At 10:15 UTC, USD/PKR trades +0.4% at 160.35
International rating agency Fitch Solutions upwardly revised its forecasts for economic growth in Pakistan. In its latest Pakistan country risk report Fitch Solutions forecasts GDP growth to be 1.1% in the fiscal year FY 2020/21, up from a previously expected 0.8%.
The agency expects the rebound in the global economy along with the global covid vaccine rollout will bode well for exports demand. This will in turn boost domestic consumption prospects on the back of better employment prospects in the export related sectors.
However, Fitch Solutions also highlighted that the economic recovery will remain slow amid elevated covid cases and partial lockdowns in the affected areas. Fitch also highlighted Pakistan’s souring relations with Saudi Arabia as another potential risk to Pakistan’s balance of payments.
The US dollar is advancing against the Rupee and also versus its major peers. The US Dollar index, which measures the greenback versus 6 major peers is trading +0.3% higher at 90.85 at the time of writing, adding to gains from the previous week.
The US Dollar is gaining strength as nerves are growing surrounding the prospects of President Joe Biden pushing his $1.9 trillion fiscal stimulus bill through Congress as a group of 10 Republicans senators urged for a scaled down proposal.
Attention will now turn to US ISM manufacturing data. Analysts are expecting the PMI to remain elevated at 59.1 in January’s final reading as the manufacturing sector continues to show resilience across the pandemic as the sector which is far less impacted by lockdown restrictions than the dominant service sector.