KARACHI, Oct 18: The rupee lost 20 paisa in inter-bank market on Monday on higher demand for dollars for payment of an $18 million oil import bill and for making ordinary outward remittances.

Senior bankers said that the rupee closed at 59.98 a US dollar at the close of the trading hours adding that some deals were struck even at 60 a dollar, the lowest level the rupee has seen in more than two years.

They said State Bank of Pakistan warned the banks not to buy dollars at artificially rates but it did not make a direct intervention to support the rupee.

The local currency has been on the decline since the start of this fiscal year in July and has so far lost more than 3.1 per cent value against the dollar primarily due to ever rising international oil prices that have weakened Pakistan's current account balance. Officials of refineries and oil marketing companies say oil import bill may rise by more than a billion dollars during this fiscal year due to increased prices in the world markets and higher demand at home.

Senior bankers said substantial forward dollar buying by some corporates also led to the weakening of the rupee on Monday.

They said the Exchange & Debt Management Department of the State Bank has sought bankers' cooperation in cooling off the pro-dollar sentiments that have prompted forward buying of dollars by the importers.

Importers are out to buy forward dollars anticipating further in fall in the rupee value and exporters are holding back their export proceeds up to the maximum permissible limits for the same reason. The combined effect of their action is that the rupee keeps falling.

The fall of the local currency has been so rapid this month that it has lost 1.2 per cent value against the dollar in just 18 days.