USD/PKR: Rupee Drops As Pakistan’s Debt Soars – Currency Live

• Pakistan’s central government debt jumps 15.8%
• PM Imran Khan outlines further plans to get the economy moving
• US Dollar (USD) rises on safe haven flows as California re-imposes some lockdown restrictions
• US inflation in focus, expected to +0.5% in June after falling -0.1% in May

The US Dollar Pakistani Rupee (USD/PKR) exchange rate is trending higher for a second straight session. The pair settled on Monday +0.3% at 167.05. At 09:30 UTC, USD/PKR trades +0.1% at 167.25.

Check real time USD to PKR exchange rate

The Pakistan Government’s debt, excluding liabilities, has soared, growing by double digit pace to Rs34.5 trillion by the end of May 2020, on an annualised basis according to the State Bank of Pakistan. This is a 15.8% increase due to currency depreciation, a shortfall in tax revenues and unforeseen coronavirus spending.

Despite soaring debt levels Prime Minister Imran Khan has made another move to revive the coronavirus battered economy. Mr Khan announced an initiative to boost the housing and construction sector. The plan aims to make it affordable for low and middle income people to build houses with low mortgage financing.

The moves by Imran Khan come as the coronavirus pandemic contracts Pakistan’s economy resulting in rising unemployment and economic difficulties, particularly for low income families.

The risk off mood in the broader financial market also weighed on the Rupee whilst boosting the safe haven US Dollar.

Sentiment soured after the state of California announced that it would be re-imposing some lockdown measures in an attempt to bring its spiralling coronavirus outbreak and soaring hospitalisations under control. If more places in the US follow suit then the fragile economic recovery in the US  could quickly be undermined.

The news comes after World Health Organization gave a stark warning that the worst of the pandemic could be yet to come as too many countries are seeing their numbers head in the wrong direction. The warning came as 230,000 new daily cases were announced.

Investors will now look to US inflation number which are expected to show that he US economic recovery is still on track for now. Consumer prices are expected to have increased +0.5% month on month in June, up from -0.1% decline in May.

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