Currency: Rupee firms, overnight rates flat

KARACHI: The rupee firmed to 86.00/06 to the dollar from 86.48/53 on Monday, amid soft dollar demand from importers. Dealers said healthy remittances from Pakistanis living abroad were also supporting the rupee, but cautioned that a widening current account deficit means the local currency could experience downward pressure in the 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. 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 flat at 11.75% and dealers said the market was now looking to Wednesday’s fortnightly treasury bills auction, in which they expect a decline in the cut-off yields.

Published in The Express Tribune, November 2^nd, 2011.