Currency : Rupee firms, overnight rates up

KARACHI: The rupee firmed to 86.62/66 to the dollar, compared with Thursday’s close of 86.74/79, amid a lack of import payments. The rupee has firmed in the previous trading session on healthy remittances from Pakistanis living abroad, but dealers cautioned a widening current account deficit means that the local currency could experience downward pressure in days ahead. Pakistan’s current account deficit surged to a provisional $908 million in September, compared with a deficit of $201 million in the previous month. For the July-September quarter, the deficit was a provisional $1.21 billion, compared with $597 million in the same period last year, according to data from the State Bank of Pakistan. In the money market, overnight rates ended higher at between 11.50% and 12%, compared with Thursday’s close of 10.50%. Dealers said there were scheduled outflows of Rs210 billion ($2.42 billion) against which the State Bank of Pakistan bought back government paper worth Rs216 billion.

Published in The Express Tribune, October 29^th, 2011.