Pakistani Rupee trades at record low of 90.35 to dollar
Latest News/KARACHI: The rupee traded at a record low of 90.35 on Wednesday because of increased import payments and a deteriorating economic outlook, dealers said.
“In addition to weak external account data, growing political uncertainty will exacerbate pressure on the rupee,” said Shamila Chaudhary, analyst at Eurasia Group.
“The break with the IMF, downward trend in U.S.-Pakistan relations, prospects of less U.S. aid, and growing civil-military tensions within Pakistan — all weaken market confidence.”
The rupee traded at its previous record low of 90.20 on Tuesday and lost 0.17 percent in one day.
The rupee ended at 90.27/31 to the dollar, compared with Tuesday’s close of 90.11/16.
There are concerns on the economic front as the country’s current account deficit stood at $2.104 billion in July-Nov compared with $589 million in the same period a year earlier.
The deficit is likely to widen further in the coming months because of debt repayments and a lack of external aid.
Islamabad has to start paying back an $8 billion International Monetary Fund loan in early 2012. Without additional sources of revenue, analysts said, its foreign exchange reserves may come under pressure.
More than $1.1 billion is due in the second half of the 2011/12 fiscal year.
Foreign exchange reserves were at $16.77 billion in the week ending Dec. 23, compared with a record $18.31 billion as of July 30.
The rupee weakened 4.82 percent in 2011, after losing 1.53 percent in 2010.
There are also concerns about growing tensions with the West which could choke off much needed foreign aid.
The United States is the biggest donor to Pakistan and has allocated some $20 billion in security and economic aid since 2001, much of it in the form of reimbursements for Pakistan’s assistance in fighting militancy.
In November, ties worsened after a cross-border NATO air attack killed 24 Pakistani soldiers.
Pakistan stocks fell because of foreign selling. The Karachi Stock Exchange’s (KSE) benchmark 100-share index ended 0.35 percent, or 40.07 points, lower at 11361.97 on turnover of 46.13 million shares.
In the money market, overnight rates ended at their lowest level of 9.10 percent, unchanged from Tuesday’s close amid increased liquidity in the interbank market.