Currency: Rupee weakens against dollar

KARACHI: In the currency market, the Pakistani rupee weakened at 97.56/62 against the dollar, compared to Thursday’s 97.34/40. The rupee came under pressure due to import payments. The local currency may fall further due to strong demand for the dollar from importers, a dealer said. The currency has remained under pressure due to debt servicing to the International Monetary Fund (IMF). Pakistan recently repaid $394.3 million on an IMF Stand-By Arrangement loan. The country has to pay $3.4 billion in 2012-13, $3.43 billion in 2013-14 and $1.35 billion in 2014-15 to retire the loan. The country’s foreign exchange reserves will continue to face pressure due to debt servicing in the next three years. According to reports, a balance of payment crisis is being predicted after March 2013, as country’s forex outflows are likely to remain at $1 billion per month, which may force Pakistan to negotiate for a fresh IMF programme if pressure is not arrested. Overnight rates in the money market ended at 9% compared to Wednesday’s close of 10%.

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