Currency: Rupee gains against the dollar

KARACHI: The rupee ended firmer at 90.60/65 to the dollar, compared with Monday’s close of 90.80/85 because of lack of import payments, but dealers expect the pressure to continue following a rise in international oil prices. Dealers said they were also cautious after the International Monetary Fund advised Pakistan to take immediate steps to tackle growing budget pressures and raise interest rates to contain inflation. The IMF last week projected a widening of Pakistan’s fiscal deficit in the 2011/12 fiscal year to 7 percent of gross domestic product, compared with the government’s revised budget target of 4.7 percent. Pakistan’s central bank kept its key policy rate flat at 12 percent on Saturday. In the money market, overnight rates ended higher at 11.90 percent, compared with Monday’s close of between 10.80 percent and 11.25 percent, amid lack of liquidity in the interbank market.

Published in The Express Tribune, February 15^th, 2012.