KARACHI, July 6: The rupee has lost 11 paisa against the US dollar so far during this month and is likely to fall further on higher demand for foreign exchange.
The demand is emanating from commercial and industrial importers as well as from the corporates that are either servicing external debts or retiring them ahead of schedule. The government is also making normal external payments.
The rupee closed at 58.23 a dollar in the inter-bank market on Tuesday, down 11 paisa from 58.12 on June 30, the last day of the outgoing fiscal year. In fiscal year July/June 2003/04 the rupee lost 31 paisa or a little more than 0.5 per cent of its value against the dollar.
The main reason for this fall was a large trade deficit of about $3.2 billion more than three times the deficit of $1.06 billion recorded in 2002-03. During this fiscal year, the rupee may fall by a bigger margin as the economy is set to grow at a faster pace thereby necessitating increased imports that is sure to widen trade deficit.
Besides, the current account surplus may also decline further on larger outflows from services' account, partly due to increased economic activity and liberalized foreign exchange regime. During July/May 2003/04, the current account surplus fell to $1.8 billion from $3.7 billion a year earlier.
