KARACHI – In the currency market, the rupee ended firmer at 90.68/73 to the dollar, compared to its close of 90.70/78 on Friday because of increased remittances from overseas Pakistanis.
Those remittances increased 23.4 percent to $8.59 billion in the first eight months of the 2011/12 fiscal year, compared with $6.96 billion in the same period last year. In February, overseas Pakistanis sent back $1.16 billion.
Dealers expect some pressure on the rupee because of rising global oil prices. Oil was trading close to $125 a barrel on Monday.
The rupee touched a record low of 91.28 to the dollar in January, dragged down by concerns over higher payments for oil imports and Pakistan’s overall economic health.
The State Bank of Pakistan warned last month that financing the country’s projected current account deficit would be a challenge.
The current account recorded a provisional deficit of $2.633 billion in the first seven months of the 2011/12 fiscal year, compared with a $96 million deficit in the same period last year, according to central bank data.
The deficit is expected to widen further in the coming months because of debt repayments and a lack of external aid.
Islamabad started repaying an $8 billion International Monetary Fund (IMF) loan last month with a $399 million payment.
Dealers said they were also cautious after the IMF advised Pakistan to take immediate steps to tackle growing budget pressures and raise interest rates to contain inflation.
The central bank kept the key policy rate flat at 12 percent for the next two months in its monetary policy announcement in February.
The IMF last month projected a widening of Pakistan’s budget deficit in the 2011/12 fiscal year to 7 percent of gross domestic product, compared with the government’s revised budget target of 4.7 percent.
In the money market, overnight rates were unchanged at their top level of 11.90 percent amid tight liquidity in the interbank market.