KARACHI, Sept 15: The Pakistani rupee on Thursday fell to its lowest since November 2004, under pressure from dollar demand for debt and corporate payments, and dealers said the pressure was likely to be sustained in the near term.

The rupee closed at 59.85/ 59.87 to a dollar against Wednesday’s close of 59.78/59.80 rupees, the weakest close since Nov 5, 2004, when the rupee ended above 60 per dollar.

Dealers said importer demand for dollars and debt payments by a number of state-run companies were weighing on the rupee.

“There is daily demand of $30-$35 million in the market other than the routine dollar buying of $25-$30 million, as a lot of banks are covering themselves for the debt payments,” said a treasury dealer at a local bank.

Bankers said importers were also in the market to hedge their forward transactions and exporters were delaying converting their earnings back into rupees.

The weaker rupee also reflects the country’s widening trade deficit and slowdown in foreign currency remittances, they added.

Pakistan’s trade deficit for July widened to a provisional $724.58 million from $699.48 million in June and from a deficit of $$273.92 million in July 2004.

Meanwhile, short-term money rates eased slightly on net inflows from government securities of over Rs19 billion, but dealers said rates could go up again as banks built cash reserves ahead of the weekend.

Pakistani banks need to keep a minimum of five per cent of their cash reserves with the central bank over the weekend.

Overnight call rates closed at around 7.5-7.75 per cent, compared with 8.0-8.25 per cent on Wednesday.—Reuters