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Rupee declines to record low
on crude oil, deficit
Staff Correspondent
Islamabad— Rupee declined to a record low on concern the nation’s
trade deficit will widen on rising import costs. Government bonds
gained. The currency headed for a ninth week of declines, the
longest losing streak in almost four years, as crude oil prices
climbed to a record this week, increasing demand for dollars in the
South Asian country that buys as much as 85 percent of its oil
overseas. The rupee was the worst performer in the past month among
the 14 most-traded Asian currencies excluding Japan.
“The widening trade gap is keeping demand for dollars high,” Malik
Bostan, chairman of the Forex Association of Pakistan, said in
Karachi. The local currency dropped 1.2 percent this week to 64.65
at 12:30 p.m. in Karachi, the weakest since at least 1988, according
to data.
Pakistan’s trade deficit widened by 45 percent to $14.5 billion in
the nine months through March from a year earlier, according to data
from the Islamabad-based Federal Bureau of Statistics. Imports grew
an average 47 percent in the first quarter, almost six times faster
than a year earlier, said a report. Pakistan’s balance-of-payments
shortfall increased in the first eight months of the financial year
that began July 1 as imports rose. The gap widened to $8.42 billion
between July and February, from $5.86 billion a year earlier,
according to data from the Karachi-based State Bank of Pakistan.
‘Absence of Inflows’ Overseas investment in Pakistan fell 33 percent
during the first eight months of the current financial year to $2.6
billion, central bank data show. Purchases of the nation’s stocks
and bonds by foreign funds fell as much as 88 percent during the
period.
“In the absence of any noticeable inflows of dollars from both
exports and investment from overseas, the rupee may keep weakening
at least in the near term,” Syed Nabeel Iqbal, head of trading and
research at Karachi-based foreign-exchange firm Khanani & Kalia
International Ltd., said this week. Government bonds advanced. The
yield on the benchmark 9.6 percent bond due August 2017 fell 2 basis
points, or 0.02 percent, to 11.52 percent. The one-year treasury
bill yielded 10.1 percent.
The State Bank of Pakistan, the nation’s central bank, drained 43.95
billion rupees ($680 million) through two-day repurchase agreements
at 8.7 percent yesterday, to remove excess liquidity in the
inter-bank market.
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