Currency: Rupee hits fresh low as US freezes aid

KARACHI: The rupee hit a fresh record low on Wednesday as import payments climbed and exporters clung tightly on to their dollars as the country’s economic outlook darkened. The rupee traded as weak as 89.67 to the dollar, one bank dealer said. This is compared with Tuesday’s close of 89.10/20. US lawmakers agreed on Tuesday to freeze $700 million in aid to Pakistan unless it steps up its fight against militant groups, adding to pressure on the country’s current account and dwindling reserves. Exporters held on to their dollars because of the bleak economic outlook, putting further pressure on the rupee, dealers said. The International Monetary Fund forecasts Pakistan’s economic growth for the 2011/12 fiscal year will slow to 3.5%, lower than the government’s target of 4.2%.

Published in The Express Tribune, December 15^th, 2011.