- Pakistan Rupee (PKR) supported by remittances and export inflows whilst oil prices & imports drag
- Foreign exchange reserves rise
- US Dollar (USD) rises across the board
- US stimulus optimism raises economic recovery expectations
The US Dollar Pakistan Rupee (USD/PKR) exchange rate is advancing paring losses from the previous week. The pair settled -0.5% lower across last week at 159.6. At 10:15 UTC, USD/PKR trades +0.5% at 160.29.
Analysts are expecting the Pakistan Rupee to remain steady versus its US Dollar counterpart this week as inflows from remittances and exports match the demand of oil and other imports.
The country’s foreign exchange reserves increased to $20,163 in the week ending January 29th, up from $20,106 billion the week previous.
Oil trades at the highest level since January 2020 on growing optimism that increased US stimulus will speed up the economic recovery and lift demand. Furthermore, evidence of compliance with OPEC+ output cuts by oil producing countries had added to the upbeat mood surrounding oil.
Pakistan Rupee traders are looking towards the Financial Action Task Force meeting on 22nd of this month where Pakistan could be removed from its grey list.
The US Dollar is pushing higher versus the Rupee and against its major peers. The US Dollar Index which measures the greenback versus its major peers trades +0.1% recovering some of its losses from Friday after a disappointing non-farm payroll report.
The US economy added 49,000 jobs in January, this was roughly in line with estimates of 50,000. Leading indicators such as the ADP private payroll report and jobless claims had pointed to a stronger reading still. So, the actual print was actually a disappointment to the market.
However, this is also expected to be a low point. As the vaccination programme ramps up, covid hospitalisations are falling and job figures from the second quarter onwards are expected to be much stronger.
As the week kicks off, attention will be firmly on the Joe Biden administration’s $1.9 trillion covid stimulus package. On Friday, the US Senate passed a budget resolution allowing the passage of the fiscal stimulus package without Republican support.