KARACHI: The rupee hits an all-time low of 85.51 against the dollar on Wednesday in the wake of payments pressure by the importers, dealers said.
In the inter-bank market, the rupee slipped by 11 paisas to close at 85.51 to a dollar from the previous day’s close of 85.40.
“The local currency never witnessed such a dip in the country’s history against the dollar,” said M Mustufa Jan, Head of Forex Research, KASB Securities.
He said that the expected payments for oil import eroded the value of the local currency.
The rupee earlier hit the record low of 85.50 just a month ago, ie, on May 31.
“Since then the local currency maintained the levels in a range of 85.30 and 85.49 against the foreign currency during June,” a dealer at the HBL Foreign Exchange (Pvt) Limited said.
In June, the rupee breached the low level in intraday several times, but recover at the close, the dealer said.
The rupee opened on Wednesday at higher levels of 85.47 and 85.50 due to high demand for the greenback and it continued as the dollar touches day’s high of 85.55.
Some selling of export dollars supported the rupee to gain the level of 85.45. However, it slipped to close at 85.51 to a dollar.
Experts had predicted the rupee depreciation as some huge payments for oil imports were due by the end of the month.
The experts estimated that around $600 million were flushed out of the market that created the dollar shortage.
A day earlier, the rupee gained sharply on high inflows of home remittances and export receipts, giving the hope that it would remain stable by the end of the year.
Analysts said that the local currency in the start of FY11 would remain under pressure due to delay in payments of the International Monetary Fund (IMF) tranche as the government deferred the imposition of Value-added Tax for three months.
The delay in release of large official foreign exchange flows will be negative for the rupee and would also keep domestic liquidity tight, a recently released report of the Standard Chartered Bank said.
“Postponing the disbursement of $2 billion will mean that the rupee could depreciate to 86.9 levels by the end of September,” it said.
Official foreign exchange flows are vital for rupee stability, given the high trade deficit, large external debt payments and slowdown in the foreign direct investment (FDI) inflows.