KARACHI, Nov 15: The rupee fell to a two-year-low against the dollar on Wednesday on rising demand for the US currency for import and debt payments, but dealers said the rupee was unlikely to fall further in the near-term.

The rupee closed at Rs60.78/80 to the dollar, down from Rs60.73/75 on Tuesday, and the lowest closing since Nov. 1, 2004.

“There were a lot of import payments, including some for oil imports, which kept dollar demand firm,” said a local bank dealer.

“In addition, some routine debt payments were also made through a state-run bank,” he said.

Dealers said while dollar demand from importers was continuing, a healthy supply of dollars was likely to limit the rupee’s decline.

“The rupee will continue to trade in a narrow band, and any sharp decline or gain is unlikely,” said a second dealer.

In the money market, short-term rates edged slightly up and dealers said banks were likely to go to the central bank’s discount window in coming days to meet cash requirements.

Overnight call rates closed at around 9.4 per cent, up from 9.0 per cent a day earlier.

“No major cash inflows are due this week so the market will remain tight in the near-term,” said a dealer at a local brokerage.

Dealers said a shortage of funds in the market over the next couple of days was also likely to force banks to borrow from the State Bank’s three-day repo facility at the discount rate of 9.5 per cent.—Reuters