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Pakistani rupee at record low; o/n rates flat
Reuters - Thursday, January 7
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KARACHI, Jan 6 - The Pakistani rupee set a record low on Wednesday for the third consecutive day because of high demand for dollars to pay for imports, especially oil, and dealers said they expected the currency to remain under pressure.
The rupee <PKR=> was quoted closing at 84.66/76 to the dollar compared with Tuesday's close of 84.65/70.
"The weakest trade for the rupee was made at 84.77," said a currency dealer in Karachi.
That compared with the previous record low of 84.70 during trade on Tuesday.
Dealers said they expected the rupee to ease to more than 85 to the dollar in coming days.
Demand for dollars to pay for oil has increased since last month when the central bank ordered commercial banks to provide foreign currency for imports of crude oil, as part of Pakistan's commitments under an International Monetary Fund programme.
Previously, the central bank had provided dollars for crude oil imports.
Pakistan secured an IMF emergency loan package of $7.6 billion in November 2008 to help avert a balance of payments crisis and shore up reserves. The loan was increased to $11.3 billion in July last year.
The State Bank of Pakistan stopped providing foreign exchange for furnace oil imports in February 2008 and for diesel and other refined product imports in August last year.
Dealers said they expected pressure on the rupee to remain because international oil prices were hovering around $82 a barrel.
Oil had been rising for nine straight days but on Wednesday, it managed to stay under $82 a barrel after industry data showed a surprise rise in U.S. distillate inventories last week even though heating oil supplies fell. [ID:nSGE60509L]
In the money market, short-term money rates eased slightly, ending between 10.50 percent and 11.00 percent, from Tuesday's close of 11.50 percent.
Dealers said they expected rates to hover around current levels as there were no scheduled inflows or outflows in coming days.
Dealers said activity was dull and there were no inflows or outflows on Tuesday. The next inflow is scheduled for Jan. 14 of 53 billion rupees and the next outflow is scheduled for Saturday of 120 billion rupees.
Stocks ended higher because of greater foreign interest that boosted local investor confidence, dealers said.
The Karachi Stock Exchange's benchmark 100-share index <.KSE> ended 69.98 points, or 0.72 percent, up at 9,727.36 on turnover of 190.17 million shares.
"Renewed foreign interest propelled the market upwards," said Asad Iqbal, managing director at Ismail Iqbal Securities Ltd.
According to official data, foreigners bought shares worth $6.9 million on Tuesday. (For more Reuters coverage of Afghanistan and Pakistan, see: http://www.reuters.com/news/globalcoverage/afghanistanpakistan)
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