• Pakistan Rupee (PKR) held steady on Tuesday
  • Pakistan’s Federal government downwardly revises economic outlook
  • US Dollar (USD) edging lower as inflation expectations ease
  • Fed Powell due to speak later

The US Dollar Pakistan Rupee (USD/PKR) exchange rate is pushing higher after a relatively muted finish on Tuesday. The pair settled -0.03% lower in the previous session at 152.55. At 11:10 UTC, USD/PKR trades +0.15% at 152.85.

The Federal government approved its budget strategy for the coming fiscal year and the outlook ios slightly more downbeat than previous. The target for 2021-22, the first year of the three year plan show a 4.2% economic growth target whilst inflation is set to reach 8%. The federal budget is expected to reach Rs8.1 trillion, up by 13% from this year. The government had initially aimed for economic growth of 4.6% and inflation of 8%.

Domestic equities pushed higher on Wednesday. The benchmark Karachi 100 index closed 0.5% higher amid an upbeat mood in the global financial markets.

Oil prices are on the rise after the EIA raised its demand outlook to 5.95 million barrels per day, up from 5.89 million. West Texas Intermediate trades +1.7%.

The US Dollar is rising versus the Rupee. However, it is falling versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.08% at the time of writing at 91.78, its lowest level in over three weeks.

The US Dollar is tracing US treasury yields lower as inflation expectations ease. Yesterday’s inflation data, the consumer price index came in ahead of forecasts with a 0.6% rise month on month in February. This is the largest increase in 8 years. However, it was a smaller overshoot than what the market was anticipating and is not likely to change the Fed’s stance on monetary policy.

This combined with soothing words from Federal Reserve Chair Jerome Powell over the past few weeks has helped ease market fears surrounding inflation.

Looking ahead, Federal Reserve Chair Jerome Powell is due to speak which could drive movement in the US Dollar.