- Pakistan Rupee (PKR) edges lower paring gains
- IMF look for fiscal adjustment to contain Pakistan’s public debt
- US Dollar (USD) trades lower versus major peers after dovish FOMC minutes
- US initial jobless claims to show 680k increase
The US Dollar Pakistan Rupee (USD/PKR) exchange rate is advancing on Thursday, paring losses from the previous session. The pair settled -0.25% lower in the previous session at 152.29. At 11:30 UTC, USD/PKR trades +0.3% at 152.80.
The International Monetary Fund has projected a sharp fiscal adjustment of over Rs 1.7 trillion over the next two years in an attempt to contain the spiraling unsustainable public debt levels.
The IMF last month restored Pakistan’s $6 billion loan programme that had been suspended for over 1 year. The programme was revived after Pakistan agreed to increase electricity prices, impose new taxes and given autonomy to the State Bank of Pakistan.
Oil prices are offering some support as both benchmarks Brent and West Texas Intermediate trade lower on Thursday. Rising covid cases across key developing markets such as Brazil and India, in addition to tighter lockdown restrictions in Europe are weighing on the demand outlook for oil.
The US Dollar is gaining versus the Rupee. However, it is trading mildly lower versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.06% at the time of writing at 92.39.
Dovish minutes from the March FOMC meeting have soothed the market. The minutes re-iterated the accommodative stance by the Fed, despite signs that the economic recovery in the US is picking up.
The minutes confirmed that the Fed considers any rise in inflation to be temporary and therefore have no plans to start tightening monetary policy sooner. The prospect of an ultra-lose monetary policy for longer has pulled the US Dollar lower.
Attention will now turn to initial jobless claims. Expectations are for 680,000 Americans to have signed up for unemployment benefits in the week April 2. This would be down from 719,000 the previous week.
Federal Reserve Chair Jerome Powell is also due to speak. However, he is not expected to bring anything new to the table.
