Currency: Rupee weakens, overnight rates rise

Local unit is expected to stay stable in the coming days because of increased remittances from Pakistanis abroad.

KARACHI: The rupee weakened to 85.88/92 to the dollar, from Thursday’s close of 85.72/76, due to increased dollar demand for import payments.  The rupee hit a record low of 86.5 last month, but dealers said the local unit is expected to stay largely stable in the coming days because of increased remittances from Pakistanis working abroad.  According to official data, remittances crossed $10 billion for the first time, hitting $10.1 billion in the first 11 months of the 2010-11 fiscal year, an increase of 25.20 per cent compared with the same period last year. In the money market, overnight rates rose to end between 13 per cent and 13.25 per cent, compared with the previous day’s close of 11 per cent, despite an eight-day reverse repo in which the State Bank of Pakistan bought back government paper worth 15 billion Pakistani rupees ($174.8 million).

Published in The Express Tribune, June 25^th, 2011.