Rupee hits fresh low

Rupee hits new all-time low as it loses another six paisa against the dollar on Tuesday.

KARACHI: The rupee lost another six paisa against the dollar during inter-bank trade on Tuesday, hitting a new all-time low. At the end of the day’s trade, one dollar cost Rs85.9, according to figures released by the Foreign Exchange Dealers’ Association.

Dealers commented that payments for imports have increased demand for the greenback in recent days. They explained that food imports for the month of Ramazan are pushing up the demand for foreign currencies.

They also attributed a noticeable percentage of the surge in dollar demand to the increased purchase of foreign currencies by those planning Umrah trips during the holy month.

“The rupee is likely to remain under pressure during the first 10 to 15 days of Ramazan at least,” commented the Forex Dealers’ Association President Malik Bostan.  Bostan has predicted that the Pakistani currency could fall as low as 86 to a dollar in coming days, but expects the rate to eventually settle in the proximity of Rs85.5.

“Floods in the country have added further risk to the local economy on the back of a fragile law and order situation,” commented an economist.

Experts highlighted that import payments would continue to exert pressure on the rupee in coming weeks. However, they noted that foreign aid pledges made to Pakistan for the war on terror and relief efforts in flood-affected areas would soon start trickling into the country. This could help prop up the local currency against further declines in coming weeks.

Published in The Express Tribune, August 4^th, 2010.