Pakistani rupee falls to record low of 87.10/dollar

Dealers said they expect the currency to remain under pressure,as dollar payments are typically higher in July and August because of stronger oil demand and debt payments.

The rupee was traded as high as 87.10 against the dollar,said a dealer at a local bank.

There were some payments of about $40 to $60 million today.

Stalled payments from a bailout programme by the International Monetary Fund (IMF) is also negatively impacting the rupee.

The IMF has criticized the Pakistan government for its patchy implementation of fiscal reforms,and has held back the sixth tranche of an $11 billion bailout programme since August last year.

IMF and Pakistan officials were due to meet last month,but the meeting has been delayed and no new date has been announced.

Dealers said increased remittances from Pakistanis working abroad had supported the rupee and shielded the currency from a sharp fall in recent weeks,but increased dollar demand over the last week has pushed the rupee lower.

According to official data,remittances rose 38.57 percent to $1.1 billion in the first month of 2011/12 fiscal year,compared with $791.18 million in the same period last year.

Dealers also said there were fears of portfolio outflows,which was driving down the sentiment.

Foreign investors sold shares worth $5.63 million last week.

Dealers said the security situation of Karachi was also weighing down the rupee,with at least 80 people killed since Wednesday,according to police officials.

The commercial hub of Pakistan has been gripped by an escalation of political and ethnic violence as well as gang wars in recent months.

According to the independent Human Rights Commission of Pakistan,800 people died in the first seven months in ethnic and politically linked violence.

In the stock market,the Karachi Stock Exchange (KSE) ended higher following a recovery in regional markets and as bargain hunters accumulated stocks at lower levels on attractive prices after falling to its lowest close since November last year on Friday.

The KSE benchmark 100-share index closed 0.13 percent,or 14.33 points,higher at 10,894.15.

Volume was at 35.73 million shares,compared with 41.01 million shares traded on Friday.

In line with regional markets,which recovered in hope that the Fed chairman may hint at more stimulus to boost fragile global economy,local stocks also stabilized,said Samar Iqbal,a dealer at Topline Securities Ltd.

In the money market,overnight rates closed at 13.15 percent,compared with Saturday’s close of between 13.00 percent and 13.10 percent.