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KARACHI: The Pakistani rupee continued to slide for a fourth day on Thursday, because of higher import payments and a bleak economic outlook, driving the currency to a record low of 88.80 to the dollar.
“There are (import) payments lined up for the next few days so it is likely the rupee will remain under pressure”, said one currency dealer.
The rupee continued to drop despite a decision on Wednesday by the State Bank of Pakistan to keep its key policy rate unchanged at 12 percent for the next two months.
“A reassessment of (the) latest developments and projections indicate that macroeconomic risks have somewhat increased during the last two months,” the SBP said on Wednesday in its monetary policy announcement.
Some analysts had expected a cut of 50 basis points. A cut in interest rates can spark further currency depreciation because of higher lending and money supply. The same dealer expressed concern over the decision.
“The outlook for the economy in the monetary policy statement also does not help support the rupee.”
The rupee ended at 88.73/83 to the dollar, compared with Wednesday's close of 88.65/75. The rupee has declined 3.6 per cent this year.
In October, Pakistan's consumer price index rose by 11 per cent from the same period in 2010, and still shows signs of inflationary pressure. There is also concern externally over Pakistan's current account deficit, which stood at $1.6 billion in the July-Oct period compared to $541 million between July-Oct in 2010.
Pakistan's foreign exchange reserves fell to $16.88 billion in the week ending Nov. 25, after hitting a record $18.31 billion in the week ending July 30.
Stocks ended slightly higher in light trading, taking cues for global markets, with investors buying energy shares following a rise in international prices.
The Karachi Stock Exchange's (KSE) benchmark 100-share index ended 0.21 percent, or 24.54 points, higher at 11,557.37 on turnover of just 27.47 million shares.
“An increase in crude oil prices helped oil stocks like OGDCL (Oil and Gas Development Co Ltd), POL (Pakistan Oilfields) and PPL (Pakistan Petroleum Ltd),” said Samar Iqbal, a dealer at Topline Securities Ltd.
OGDCL ended 0.58 percent higher at 154.00 rupees, POL rose 0.1 per cent to 356.61 rupees, and PPL gained 1.04 per cent to end at 174.24 rupees.
In the money market, the overnight rate rose to a high of 11.90 per cent, compared with the previous day's close of between 11.50 per cent and 11.75 per cent, because of scheduled net outflows of 34 billion rupees ($383.29 million).
