Rupee slides for fourth consecutive day

Bleak economic outlook, import payments remain top reasons.

KARACHI:

The rupee fell for a fourth day on Thursday, because of higher import payments and a bleak economic outlook, driving the currency to a record low of 88.80 to the dollar. 

The rupee ended at 88.73/83 to the dollar, compared with Wednesday’s close of 88.65/75. The local unit has declined 3.6% this year. “There are (import) payments lined up for the next few days so it is likely the rupee will remain under pressure”, said one currency dealer. The rupee continued to drop despite a decision on Wednesday by the State Bank of Pakistan to keep its key policy rate unchanged at 12% for the next two months.

“A reassessment of (the) latest developments and projections indicate that macroeconomic risks have somewhat increased during the last two months,” the SBP said on Wednesday in its monetary policy announcement.

In the money market, overnight rates rose to a high of 11.90%, compared with the previous day’s close of between 11.50% and 11.75%, because of scheduled net outflows of Rs34 billion ($383.29 million). 

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