Rupee at new record low of 88.28 to the dollar

Import payments, concerns about local economy continue to bash local currency.

KARACHI: Import payments, weak global sentiment over currencies and concern over Pakistan’s economy continued to hammer the Pakistani rupee on Tuesday, which continued its slide and hit a record low of 88.28 to the dollar.

The rupee ended at 88.25/30, compared with Monday’s close of 88.02/07. However dealers said the rupee traded at 88.36 in the one-day forward market (TOM).

“There are a few payments but the sentiment is very weak about the global economy and Pakistan’s economy as well,” said a dealer at a bank. According to a poll conducted by Reuters last week, investors grew more bearish on most emerging Asian currencies in the last two weeks, as Europe’s debt crisis deepened. The rupee has lost 3.02% this year.

There was also some concern following an assessment by the International Monetary Fund (IMF) that Pakistan’s economic outlook for the fiscal year ending June 2012 was “challenging”, dealers said. In a statement last week, the IMF said that ongoing security concerns were likely to limit capital inflows.

Dealers said the rupee was under pressure despite increasing remittances from overseas Pakistanis, which rose to $1.02 billion in October, compared with $855.11 million in October 2010.

The local currency could also experience downward pressure in the days ahead due to a widening current account deficit, which stood at a provisional $1.5 billion in the July-Oct period, compared with $541 million in the same period last year.

In the money market, the overnight rate ended at its top level of 11.90%, amid tight liquidity in the interbank market.

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