Rupee nears record low against dollar

Oil import payments keep dollar demand high.

KARACHI:

The rupee fell on Wednesday, inching closer to its record low amid higher dollar demand from importers and dealers said the local unit is likely to stay under pressure because of import payments.

The rupee ended at 87.50/55 to the dollar, weaker than Tuesday’s close of 87.35/40. It hit a record low at 87.92 to the dollar in September. “There were import payments, especially for oil, of around $100 million which pulled the rupee lower,” said a dealer at a foreign bank.

There was also some concern on the economic front following the International Monetary Fund’s (IMF) assessment that outlook for Pakistan’s economy for the current year ending June 2012 was “challenging”, dealers said.

In a statement issued on Tuesday, the IMF also said that ongoing security concerns were likely to limit capital inflows.

Dealers said the rupee was under pressure despite rising remittances from overseas Pakistani, which rose to $1.02 billion in October, compared with $855.11 million received in October last year.

The local currency could also experience downward pressure in the days ahead due to a widening current account deficit that stood at a provisional $1.5 billion in the July-Oct period, compared with $541 million in the same period last year.

In the money market, overnight rates ended at its top level of 11.90%, amid tight liquidity in the interbank market. 

Published in The Express Tribune, November 24^th, 2011.