Rupee down at 90.4/98 against dollar

KARACHI: In the currency market, Wednesday, the rupee ended weaker at 90.94/98 to the dollar, compared with Tuesday's close of 90.90/99 and dealers expect pressure on the rupee to persist because of higher import payments.

The rupee touched a record low of 91.28 to the dollar in January, pressured by worries about higher payments for oil imports and the country's overall economic health.

Islamabad started repaying an $8 billion International Monetary Fund (IMF) loan on Friday with a $399 million payment.

The State Bank of Pakistan cautioned this month that financing the country's projected current account deficit would be a challenge.

The deficit is expected to widen further in the coming months because of debt repayments and a lack of external aid.

The current account recorded a provisional deficit of $2.633 billion in the first seven months of the 2011/12 fiscal year, compared with a deficit of $96 million in the same period last year, according to data from the State Bank of Pakistan.

Dealers said they were also cautious after the IMF advised Pakistan to take immediate steps to tackle growing budget pressures and raise interest rates to contain inflation.

The central bank kept the key policy rate flat at 12 percent for the next two months in its monetary policy announcement earlier this month.

The IMF in February projected a widening of Pakistan's budget deficit in the 2011/12 fiscal year to 7 percent of gross domestic product, compared with the government's revised budget target of 4.7 percent.

In the money market, overnight rates were unchanged at its top level of 11.90 percent amid increased liquidity in the interbank market. (Reuters)