Rupee at record low of 87.23

KARACHI: Increased payments for imports and gloomy sentiment surrounding the country's economic outlook forced the Pakistani rupee to end on a record low on Monday, dealers said, with downward pressure likely to continue.

The rupee closed at 87.15/20 to the dollar.

"During the day, the rupee was traded at 87.23 to the dollar, compared to the previous all-time low of 87.17 made on Saturday," said a dealer at a local bank.

At least three import payments helped drive the rupee down, he said.
Dealers said they expect the currency to remain under pressure, as dollar payments are typically higher in July and August because of stronger oil demand and debt payments.

Stalled payments from a bailout programme by the International Monetary Fund (IMF) are also hammering the rupee.

The IMF has criticized the Pakistan government for its patchy implementation of fiscal reforms and has held back the sixth tranche of an $11 billion bailout programme since August last year.

IMF and Pakistan officials were due to meet last month, but the meeting was delayed and no new date announced.

Some support, however, could come from higher remittances from overseas Pakistanis. According to official data, remittances rose 38.57 percent to $1.1 billion in the first month of 2011/12 fiscal year, compared with $791.18 million in the same period last year.

Market pessimism left shares almost flat after state-owned institutions stepped in to accumulate stocks at lower levels, stemming early-morning losses, but dealers said volume is likely to remain thin ahead of the long holiday weekend.

Markets will be closed from Wednesday to Saturday because of the Muslim festival of Eid-ul-Fitr.

In the money market, overnight rates fell to end between 13.00 percent and 13.25 percent, compared with Saturday's close of 13.40 percent. (Reuters)