• Pakistan Rupee (PKR) rises for a fourth straight session
  • FDI tanks 29.9% over the 1st 8 months of FY21
  • US Dollar (USD) trades flat versus major peers
  • US FOMC rate decision in focus

The US Dollar Pakistan Rupee (USD/PKR) exchange rate is falling lower on Wednesday, extending losses for a fourth straight session. The pair settled -0.19% lower in the previous session at 156.42. At 10:15 UTC, USD/PKR trades -0.75% at 155.25.

According to the State Bank of Pakistan, Foreign Direct Investment (FDI) continued to decline in February. FDI fell by an eye watering 29.9% Year on year in the first 8 months of the current fiscal year.

Despite the decline in Chinese investment in Pakistan, China remained the top investor in FY21 with $493.9 million arriving from the economic power. Netherlands and Hong Kong come in second and third place but with significantly less investment at $117.8 million and $106.3 million respectively.

The US Dollar is trading lower versus the Rupee. However, it relatively flat versus its major peers. The US Dollar Index which measures the greenback versus a basket of major peers trades just 3 pips lower at 91.83 at the time of writing, after three straight days of gains.

All eyes are firmly on the Fed. The US central bank will release its monetary policy decision today at 18:00 UTC. This is one of the most keenly awaited Federal Reserve meetings in some time as it is the first meeting since US inflation expectations started moving rapidly higher reflected in the rising US treasury yields.

The Fed is not expected to move on policy. However, the central bank is expected to upwardly revise its growth and inflation forecast. This means that Jerome Powell will be in a difficult position of sounding upbeat regarding the vaccine and stimulus led recovery, without bolstering fears of the economy overheating and tighter rates round the corner.

How the market reacts to the upward revisions and Jerome Powell’s tone could direct the US Dollar over the coming week. A hint too much optimism and the US Dollar could surge higher.