Pakistani rupee weakens; stocks end down; o/n rates up
KARACHI: The Pakistani rupee fell on Monday amid higher dollar demand from importers, and dealers said the local unit is likely to stay under pressure because of import payments.
The rupee ended at 87.30/35 to the dollar, weaker than Friday’s close of 87.14/18.
“There were import payments of around $100 million which pulled the rupee lower,” said a dealer at a foreign bank.
Dealers said the rupee was under pressure despite rising remittances from overseas Pakistani.
According to official data, remittances rose 23.24 per cent to $4.3 billion in the first four months of the 2010/11 fiscal year (July-June), compared with $3.50 billion in the same period last year.
Remittances rose to $1.02 billion in October, compared with $855.11 million received in October last year. However, dealers cautioned that a widening current account deficit means the local currency could experience downward pressure in the days ahead.
Pakistan’s current account deficit stood at a provisional $220 million in October, compared with a deficit of $1.034 billion in the previous month, the central bank said.
For the July-October period, the deficit stood at a provisional $1.555 billion, compared with $541 million in the same period last year, according to data from the State Bank of Pakistan.
The rupee hit a record low at 87.92 to the dollar in September.
Stocks ended lower in thin trade taking a cue from world markets, dealers said.
Fears about out-of-control government debt on both sides of the Atlantic swept across financial markets again on Monday, knocking stocks sharply lower and pushing up prices of bonds deemed to be safe havens.
“A major fall in global stocks and commodities on US and Europe debt fears affected the sentiment on the local bourse,” said Ahsan Mehanti, director at Arif Habib Investment Ltd.
The Karachi Stock Exchange’s (KSE) benchmark 100-share index ended 0.36 per cent, or 43.02 points, lower at 11,894.79 on turnover of only 31.1 million shares.
In the money market, overnight rates rose to close at 11.90 per cent, compared with Friday’s close of 11.75 per cent, amid a shortage of funds.