- Pakistan Rupee (PKR) trades mildly higher
- High inflation set to remain as money in circulation increased 17.4% YoY
- US Dollar (USD) rallies versus major peers on safe haven flows
- US covid & election jitters unnerve investors
The US Dollar Pakistan Rupee (USD/PKR) exchange rate is declining mildly on Wednesday. The pair settled on flat on Tuesday at 160.65, towards the lower end of the daily traded range. At 09:15 UTC, USD/PKR trades -0.9% at 160.50.
Pakistan continue to see rising numbers of coronavirus cases as the second wave spreads across the country. The finance ministry warned that the resurgence of covid in Pakistan poses a major risk to the “otherwise promising outlook”. The ministry also warned that inflation will remain high between 7.3% – 9.3% in October. The consumer price index hit 9% in September. This is down to a double-digit increase in money in circulation and rising food prices.
According to the State Bank of Pakistan the amount of currency in circulation increased 17.4% over the past year.
The US Dollar is trading on the back foot versus the Pakistan Rupee although is trading sharply higher versus its major peers as investors seek its safe haven properties. Risk aversion is dominating the financial markets boosting demand for safe havens whilst investors shunning riskier currencies.
Rising covid cases in both Europe and the US are unnerving investors. As countries tighten lockdown restrictions investors are fearing the impact that these stricter measures will have on the global economic recovery.
US elections jitters are also adding to the risk off mood. Whilst the national polls show that Joe Biden has the lead, the race ain’t over until its over. Investors fear that the same polls that are putting Biden in the lead failed to predict Trump’s victory in 2016.
There is no high impacting US data for investors to focus on today. Instead sentiment and covid headlines will continue to drive the greenback ahead of Q3 GDP data due to released tomorrow.
