KARACHI (Reuters) - The Pakistani rupee weakened on Monday amid increased payments for imports and dealers expect the pressure to continue because of a widening current account deficit.
The rupee ended at 89.39/44 to the dollar, weaker than Friday’s close of 89.20/30. The rupee hit a record low of 90.03 last week.
“The economic outlook for the country still remains bleak and therefore the rupee is likely to steadily depreciate,” said a bank dealer. The country’s current account deficit stood at $2.104 billion in July-Nov compared with $589 million in the same period a year earlier.
The deficit is likely to widen further in coming months because of debt repayments and a lack of external aid.
Islamabad has to begin repayments on an $8 billion IMF 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 2011/12 fiscal year.
Foreign exchange reserves were at $16.66 billion in the week ending Dec. 16, compared with a record $18.31 billion as of July 30. Dealers said Pakistan and China signing a bilateral currency swap agreement on Friday slightly improved the sentiment.
Pakistan and China on Friday signed a bilateral currency swap agreement to promote trade between the two countries and also further strengthening their economic ties, Pakistan’s central bank said in a statement.
The bilateral currency swap agreement is of 10 billion yuan Chinese yuan ($1.58 billion) 140 billion Pakistani rupees ($1.57 billion)and would end in three years.