Rupee weakens, stocks, o/n rates down

The rupee fell close to a record low on Tuesday on strong demand for the dollar for oil import payments, and dealers said the local unit is expected to weaken further in the days ahead.

The rupee ended at 86.40/42 to the dollar, weaker than Monday’s close of 86.32/37. In May it hit a record low of 86.50 to the dollar.

“The rupee was traded as high as 86.43 because of oil import payments, and the pressure is likely to continue,” said a dealer at a foreign bank.

Dealers said there was unlikely to be a sharp fall in the rupee but it may gradually weaken in the long term.

The rupee has held steady since May’s low largely due to increased remittances from Pakistanis working abroad.

According to official data, remittances rose to a record $11.2 billion in the 2010/11 fiscal year, an increase of 25.77 percent from the previous year.

In the stock market, the index ended lower with volume thin as investors stayed away because of concerns regarding the security situation in Karachi, the country’s commercial capital, dealers said.

The Karachi Stock Exchange (KSE) benchmark 100-share index ended down 0.61 percent, or 76.04 points, at 12,364.06 on turnover of 54.54 million shares.

Dealers said there could be some interest in the coming days in certain stocks on hopes of healthy corporate profits as company results are due to be announced soon.

In the money market, overnight rates ended lower at 12 percent to 12.50 percent, compared with Monday’s close of 13.50 percent and 13.75 percent because of inflows of 44 billion rupees.