Rupee, o/n rates end flat

KARACHI: The rupee ended flat on Thursday but dealers expect pressure on the local unit because of import payments for oil and the country's widening current account deficit.

The rupee ended at 89.96/90.01 to the dollar, compared with Wednesday's close of 89.97/90.02. The rupee was traded at its record low of 90.03 on Wednesday.

"The rupee is likely to hit a new record low in the short term," said a bank dealer.

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 are 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.

Dealers said the signing of a Pakistan-China currency swap agreement slightly improved sentiment. The agreement was signed to promote bilateral trade and also further strengthen economic ties, State Bank of Pakistan said in a statement.

The bilateral currency swap agreement is of 10 billion Chinese yuan ($1.58 billion) for 140 billion rupees ($1.57 billion) and would end in three years.

In the money market, overnight rates ended at their lowest level of 9.10 percent, unchanged from Wednesday's close, as there were scheduled inflows of 55 billion rupees and outflows of 200 million rupees ($2,225,932.109). (Reuters)