• Pakistan Rupee (PKR) closed lower at the start of the week
  • Oil extends gains, domestic equities rebound
  • US Dollar (USD) trades at 6 week low versus major peers
  • USD slips despite yields rising

The US Dollar Pakistan Rupee (USD/PKR) exchange rate rising on Tuesday, after booking losses in the previous session. The pair shed -0.4% on Monday, settling at 152.60. At 11:00 UTC, USD/PKR trades +0.15% at 152.82.

The International Monetary Fund urged Pakistan to implement tax and energy reforms in an effort to reduce the extremely high public debt. The IMF is clear over these objectives despite the resurgence of covid and calls by the new Finance Minister to renegotiate the terms of the IMF deal.

Domestic equities are rebounding after steep losses in the previous session. The Karachi 100 is trading +1% heading towards the close.

Oil prices continue to rise thanks to the weaker US Dollar and ahead of API inventory data later today. Expectations are for a draw in crude stock piles.

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 -0.05% at the time of writing at 91.04 its lowest level in 6 weeks.

The US Dollar trades under pressure despite rising treasury yields. The benchmark US 10 year treasury yield trades 0.4% higher above the key 1.60% level. The US Dollar falling whilst US treasury yields rise is a reverse move to what we were seeing in the first three months of the year.

It would seem that the continued reassurance from the US Federal Reserve that any rise in inflation will be temporary, is finally sinking in.

There is no high impacting US data today. In fact the US economic calendar is relatively quiet across the week. Instead investors will be looking towards Washington for further developments surrounding the Biden administration’s $2.5 trillion infrastructure stimulus plan. President Biden met with a group of bipartisian congressional law makers on Monday to drum up support for his package.