Rupee slips to another low

The value of rupee continued to decline against US dollar as gold touches fresh highs.

KARACHI: The value of rupee continued to decline against US dollar on Thursday as the local currency closed at fresh lows of 86.26/31, against Wednesday’s close of 86.24/29.  Meanwhile, gold touched fresh highs as it closed at Rs36,342 per 10 grams.

The depreciation of rupee was attributed by dealers to an increase in dollar demand for import payments and lack of foreign inflows.

A currency dealer said that rupee had briefly traded at 86.33, beating the previous record low of 86.29 on Wednesday.

Dealers said the quantum of current foreign inflows was not enough to help strengthen the rupee and they expect the local unit to weaken further. The rupee has lost 1.19 per cent of its value so far this year, after falling 6.17 per cent during the previous year.

Meanwhile, gold prices increased by Rs200, rising to Rs42,200 per tola (11.7 grams) in the wake of a hike in international rates, rising by $6 to $1,315 an ounce.

All Pakistan Supreme Council of Jewellers Association president Haroon Chand said that the price of the precious metal is likely to rise further in the upcoming month because of the turmoil in global economy.

Both the currency and commodity markets witnessed extreme volatility in September as the former hit lows seven times this month beginning at 85.85/90, while the latter hit highs an equal number of times, starting with Rs34,157 per 10 grams during the same period.

As a result, the rupee lost 41 paisas in a month, while the precious metal gained Rs2,185 per 10 grams during the same period. Dealers said that September had been a tremulous month for Pakistani public as people holding greenback and gold earned unprecedented profits, while consumers at large had suffered from a declining value of rupee against US dollar and expensive gold.

In the money market, overnight rates ended at 10.5 per cent, against Wednesday’s close of 10 per cent. Following the central bank raise of the key policy rate, the ceiling now stands at 13.5 per cent and floor at 10.50 per cent, compared with the previous ceiling of 13 per cent and 10 per cent.

Published in The Express Tribune, October 1^st, 2010.