Rupee on the down vs dollar

KARACHI: On Monday, the rupee ended weaker at 90.80/85 to the dollar, compared with Friday's close of 90.69/74/75 because of increased import payments, and dealers expect the pressure to continue following a rise in international oil prices.

Pakistan's central bank kept its key policy rate flat at 12 percent on Saturday and said "the real challenge is to finance the projected current account deficit."

The current account recorded a provisional deficit of $2.154 billion in the first six months of the 2011/12 fiscal year, compared with a surplus of $8 million in the same period last year, according to data from the State Bank of Pakistan.

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

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

The IMF last week projected a widening of Pakistan's fiscal 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.

The rupee touched a record low of 91.28 to the dollar on Jan. 9, pressured by worries about higher payments for oil imports and the country's overall economic health, especially a weakening current account.

In the money market, overnight rates ended between 10.80 percent and 11.25 percent, compared Friday's close of 11.90 percent because of increased liquidity in the interbank market. (Reuters)