May 16, 2008	Friday	Jamadi-ul-Awwal 10, 1429

KARACHI, May 15: The rupee weakened slightly on Thursday, heading back towards a record low as demand for dollars emerged from importers in an otherwise extremely thin market, dealers said.

The rupee was quoted at 68.70/69.25 to the dollar at the close, compared with Wednesday’s close of 68.60/69.10 and a record closing low of 69.40/60 struck on May 9.

“There was extremely thin trade today and we saw pressure on the rupee due to some few import payments,” said a Karachi-based dealer.

The rupee has been under pressure due to increased demand for dollars from importers, particularly for oil payments as a result of rising international prices.

Dealers said the few deals struck ranged between 69 rupees and 69.20 rupees to the dollar.There was concern about the country’s economic situation, with inflation at a 30-year high and widening trade and fiscal deficits.

There was also speculation the central bank, which closely shepherds the exchange rate, may consider aggressive monetary tightening before its next scheduled policy review in July to curb import demand.

Dealers said a fall in foreign exchange reserves had left little room for central bank intervention to prop it up.

The government has also entered a crisis this week after former prime minister Nawaz Sharif decided to pull nine ministers from his party, including Finance Minister Ishaq Dar, out of the six-week-old coalition government’s cabinet.—Reuters