Currency: Rupee near record low

KARACHI: The rupee fell close to a record low on Tuesday on strong demand for the dollar for oil import payments and dealers said the local unit is expected to weaken further in the days ahead. The rupee ended at 86.40/42 to the dollar, weaker than Monday’s close of 86.32/37. In May it hit a record low of 86.50 to the dollar. “The rupee was traded as high as 86.43 because of oil import payments, and the pressure is likely to continue,” said a dealer at a foreign bank. Dealers said there was unlikely to be a sharp fall in the rupee but it may gradually weaken in the long term. The rupee has held steady since May’s low largely due to increased remittances from Pakistanis working abroad. According to official data, remittances rose to a record $11.2 billion in the 2010/11 fiscal year, an increase of 25.77 per cent from the previous year. In the money market, overnight rates ended lower at 12 per cent to 12.50 per cent, compared with Monday’s close of 13.50 per cent and 13.75 per cent because of inflows of Rs44 billion.

Published in The Express Tribune, July 27^th,  2011.