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KARACHI: In the currency market on Friday, the rupee ended weaker at 90.77/83 to the dollar, compared with Thursday’s close of 90.68/73 because of higher import payments especially of oil as global oil prices were trading near $120 a barrel.
The rupee touched a record low of 91.28 to the dollar on Jan 9, pressured by worries about higher payments for oil imports and the country’s overall economic health.
The rupee is likely to stay under pressure, and the State Bank of Pakistan has cautioned that the real challenge was to finance the projected current account deficit. The latest monetary policy announcement kept the key policy rate flat at 12 per cent for the next two months.
The current account recorded a provisional deficit of $2.633 billion in the first seven months of the 2011/12 fiscal year, compared with a deficit of $96 million in the same period last year, according to data from the State Bank of Pakistan.
The deficit is likely to widen further in coming months because of debt repayments and a lack of external aid.
Dealers said they were also cautious after the International Monetary Fund (IMF) advised Pakistan to take immediate steps to tackle growing budget pressures and raise interest rates to contain inflation.
The IMF last week projected a widening of Pakistan’s budget deficit in the 2011/12 fiscal year to 7 per cent of gross domestic product, compared with the government’s revised budget target of 4.7 per cent.
In the money market, overnight rates ended flat at the top level of 11.90 per cent, unchanged from Wednesday’s close amid lack of liquidity in the interbank market.
