KARACHI, Dec 15: Pak rupee took a surprise dip against the dollar on Monday and lost almost Rs1.25 per unit shaking the market confidence on the local currency.

The dollar was traded over Rs80 and closed at Rs80.10, which was highest since mid of last month dispelling the improved perception of the market about rupee’s potential and strength.

The market witnessed the dollar trading at Rs78.80-85 on Saturday that was a good gain against the US currency, which evaporated the value of rupee by 25 per cent since beginning of this year.

The sudden and significant deprecation of rupee surprised some currency dealers, who were looking for reasons to justify the dollar’s appreciation.

“This is surprising because the dollar inflows have been rising and the reserves reached a reasonable level enough to strengthen rupee against all major currencies,” said Atif Ahmed, a currency dealer.

After the agreement with the International Monetary Fund (IMF) the country’s reserves were well above $9.9 billion, while the inflows through overseas workers remittances also strengthened the total. Remittances rose by 15 per cent during the last five months.

The currency dealers said the demand for dollar was high while supply was short. At the same time, few banks were engaged in making large payments.

“The exchange market was partly nervousness due to opening of stock markets as they fear outflow of dollars in bulk quantity,” said Atif.

The overseas investment in Pakistani shares market was about $2.2 billion and brokers fear that the most of the investment will fly back to the real investors.

One of the reasons to stop functioning of the stocks business in Pakistan was the government’s fear of massive outflow of dollars from the country and this possible outflow was delayed at least for 100 days. The stock markets were opened on Monday but the major scrips could not be traded because a related case was sent to the Sindh High Court.

“The year is coming to an end, payments are high while the supply was short as the New York was closed since it was Sunday in US,” said another dealer.

He believes that things could be better in next few days and rupee could get back its earlier position of Rs78.50-80.

However, most of the currency dealers believe that with the complete resumption of stocks business outflow of dollars would be much higher and that would put pressure on rupee leading to depreciation.

An analyst said the tension between Pakistan and India was another reason for pressure on dollar demand as the uncertainty increases dollars demand in countries like Pakistan.

He said dollars were bought by the households to protect their savings and these dollars go out of circulation thus creating a gap for replacement with fresh greenbacks.

He said when the first tranche of IMF loan of $3.1 billion was received in Pakistan, dollar remained unmoved and rupee-dollar parity remained the same despite massive inflows.

‘This indicates that factors other than reserves have strong grip over the relations between the two currencies,” he said.