Rupee weakens; o/n rates end lower
KARACHI: In the currency market on Tuesday, the rupee ended weaker at 90.62/67 to the dollar, compared with Monday’s close of 90.50/56 due to increased import payments, particularly oil.
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 projected a widening of Pakistan’s fiscal deficit in the 2011/12 fiscal year to 7 per cent of gross domestic product, compared with the government’s revised budget target of 4.7 per cent.
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.
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.
In the money market, overnight rates ended lower at between 11.25 per cent and 11.75 per cent, compared with Monday’s close of 11.90 per cent after the central bank bought back government paper worth 37 billion rupees ($408.70 million).