KARACHI - The dollar weakened against the Pakistani rupee in the interbank market on Friday, dealers said. It started the day’s trading at Rs 89.66 for buying, fell 55 paisas and closed at Rs 89.11 for buying and Rs 89.16 for selling. The European currency recorded bearish momentum in its value against rupee as it began the day’s trading at Rs 117.48 for buying, decreased Rs 1.01 and closed at Rs 116.47 for buying and Rs 116.67 for selling. The British pound lost strength against local currency, it initiated the day’s trading at Rs 140.88 for buying, depreciated Rs 1.03 and closed at Rs 139.85 for buying and Rs 140.05 for selling.
In open market, the dollar declined against rupee, dealers said. It initiated the day’s trading at Rs 89.8 for buying, decreased 80 paisas and closed at Rs 89 for buying and Rs 89.85 for selling. The Euro recorded loss against local currency as it started the day’s trading at Rs 117, moved 50 paisas down and closed at Rs 116.5 for buying and Rs 119 for selling.
The Pound sterling witnessed depreciation in its strength against the rupee. It began the day’s trading at Rs 140.2 for buying, lost 40 paisas and closed at Rs 139.8 for buying and Rs 141.3 for selling.
Reuters adds: Dealers said the currency should hold steady at least in the near term.
“There was probably some dollar selling by the central bank in the market to stem the continuous slide,” said a dealer at a local bank.
“After the intervention, there was enough supply in the market Friday as well to meet the dollar demand from importers,” he said. Dealers said the rupee is likely to slowly depreciate in the medium term because of pressure on Pakistan’s external accounts.
The country’s current account deficit stood at $2.104 billion in July-Nov compared with $589 million in the same period last year. The deficit is likely to widen further in the coming months because of debt repayments and a lack of external aid.
Islamabad has to begin repayments on an $8 billion International Monetary Fund loan in early 2012, and without additional sources of revenue, its foreign exchange reserves may come under pressure, analysts said.
It has to make a repayment of more than $1.1 billion in the second half of its 2011/12 fiscal year. There are also concerns on the fiscal side. The central bank on Monday asked the government to move quickly to broaden its tax base and restructure loss-making public entities to control its widening fiscal deficit, which is already set to overshoot targets.
The State Bank of Pakistan said the deficit for fiscal 2011/12 ending June 30 is likely to range between 5.5 and 6.5 percent of gross domestic product (GDP), “with a bias on the upside” and against a government target of 4 percent.
The central bank also said in its annual report that the economy is likely to grow by 3-4 percent during the year, broadly in line with the 3.8 percent forecast by the IMF, but lower than the government’s target of 4.2 percent.