KARACHI, Oct 5: The rupee lost five paisa on Tuesday to close at 59.30 a US dollar in the inter-bank market as some banks resorted to heavy buying of foreign exchange to pay their customers' import bills. These also included oil import payments.

On Monday the rupee had gained one paisa to close at 59.25 a dollar as the central bank had provided $100 million to Parco for onward payment to a consortium of banks in third instalment of Rs22 billion rupee-dollar swap it had earlier contracted with these banks.

Since July 1, the local currency has lost 1.9 per cent of its value against the dollar on the back of importers' led demand for dollars primarily fuelled by soaring international oil prices.

Senior bankers say the currency may weaken further due to rising trade deficit. In July-September 2004, the trade deficit shot up to $839 million from around $145 million in a year-ago period, provisional data released by the Federal Bureau of Statistics show.