Currency: Rupee firms, overnight rates higher

KARACHI: The rupee firmed to 86.48/53 to the dollar on Monday from 86.62/66 on Friday, amid soft dollar demand from importers. “There was not much of a demand for the dollar, so we saw the rupee gaining value,” said a bank dealer. Dealers said healthy remittances from Pakistanis living abroad were also supporting the rupee, but cautioned a widening current account deficit means that the currency could experience downward pressure in the days ahead. The current account deficit surged to a provisional $908 million in September, compared with a deficit of $201 million in the previous month. The deficit for the July-September quarter was a provisional $1.209 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 around 11.75%, little changed from Friday’s close, and dealers said the market was now eyeing Wednesday’s fortnightly treasury bill auction.

Published in The Express Tribune, November 1^st, 2011.