KARACHI, May 31: The rupee shed 24 paisa to a US dollar in the inter-bank market in May 2004 because of increased government and corporate sector external debt payments and higher dollar buying by importers.

The rupee went down from 57.47 a dollar at end-April to 57.69 at end-May in the inter-bank market on higher dollar buying by banks for corporate debt payments and for financing imports. But in 11 months to May 2004, the rupee did gain 12 paisas against the dollar, rising from Rs57.81 at end-June 2003 to 57.69 at end-May 2004.

Senior bankers and sources at the State Bank say the rupee may lose another few paisas in June due to further corporate external debt payments, including $355 million by Pak-Arab Refinery Company amidst growing trade deficit.

The rupee lost 20 paisa to a dollar also in the open currency market in May, falling from Rs58.05 to a dollar for spot selling by money changers on April 30 to Rs58.25 on May 31, 2004.

The spread between the inter-bank and open market exchange rates currently stand at 56 paisa a dollar, slightly higher than the desired level of 50 paisa.

Central bankers and money changers say when the spread is 50 paisa or less it does not provide enough incentive to expatriate Pakistanis to send foreign exchange back home through informal channels.