- Pakistan Rupee (PKR) shrugs off turmoil in peer EM Turkish Lira
- Covid cases +3669 & PM Imran Khan tests positive
- US Dollar (USD) trades steady ahead of Fed Powell’s appearance.
- A quiet economic calendar leaves sentiment to drive movement
The US Dollar Pakistan Rupee (USD/PKR) exchange rate is moving lower at the start of the week paring gains from the previous week. The pair gained +0.3% Monday through to Friday, settling at 155.80. At 10:50 UTC, USD/PKR trades -0.7% at 155.65.
Covid cases in Pakistan are rising rapidly raising concerns of a third wave. The minister for planning today announced that restrictions on activities contributing to the rising covid cases will be increased.
Tighter restrictions come as the number of covid cases rose by 3,669 over the past 24 hours. Prime Minister Imran Khan has also contracted the virus.
Emerging market currencies were experiencing volatility after Turkish President Erdogan unexpectedly decided to fire the hawkish Turkish central bank governor. The Turkish Lira plunged 14% on the open on fears of unstable monetary policy. The Rupee appears so far unscathed by the hit to sentiment.
The US Dollar is trading sharply lower versus the Rupee. However, it is trading flat versus its major peers. The US Dollar Index which measures the greenback versus a basket of 6 majors, trades +0.02% at 91.94 at the time of writing.
The US Dollar have given back earlier Turkey inspired safe haven flows as the mood in the market improves. Investors are now looking ahead to Federal Reserve Chair Jerome Powell testifying before Congress with US treasury secretary Janet Yellen.
The testimony is unlikely to bring a chance in tone or stance from last week’s Federal Reserve monetary policy statement and press conference. At the latest Fed meeting, the US central bank boosted the US growth forecast considerably to 6.5% this year, although doubled down on its supportive stance.
Whilst rising inflation expectations have underpinned the US Dollar across recent session, US treasury yields are easing lower at the start of the week, capping any gains in the greenback.