Rupee at record low of 87.23 against dollar

Downward pressure expected to continue, says dealer.

KARACHI: Increased payments for imports and gloomy sentiment surrounding the country’s economic outlook forced the rupee to end on a record low on Monday.

The rupee closed at 87.15/20 to the dollar amid dealers expecting the downward pressure to continue.

“During the day, the rupee was traded at 87.23 to the dollar, compared to the previous all-time low of 87.17 made on Saturday,” said a dealer at a local bank.

At least three import payments helped drive the rupee down, dealer added.

Dealers said that they expect the currency to remain under pressure, as dollar payments are typically higher in July and August because of stronger oil demand and debt payments.

Stalled payments from a bailout programme by the International Monetary Fund (IMF) are also hammering the rupee. The IMF has criticised the government for its patchy implementation of fiscal reforms and has held back the sixth tranche of an $11 billion bailout programme since August last year.

IMF and Pakistan officials were due to meet last month, but the meeting was delayed and no new date announced.

Some support, however, could come from higher remittances from overseas Pakistanis. Remittances rose 38.57 per cent to $1.1 billion in the first month of 2011/12 fiscal year, compared with $791.18 million in the same period last year, according to official data.

Published in The Express Tribune, August 30^th,  2011.