Pakistan rupee hits new low

Karachi: The Pakistani rupee weakened to trade at a record low of 80.85 to the dollar early on Wednesday as it came under more pressure from import payments, dealers said.

There was talk in the market that the central bank may have verbally intervened to support the rupee, and the currency briefly recovered slightly, but later eased again. It was quoted closing near its low at 80.65/85 to the dollar.

The rupee has weakened 22.7 per cent since the beginning of the year.

Pakistan's foreign exchange reserves have gone down sharply in recent months. Analysts believe the central bank's reserves are barely enough to cover two months of imports.

"This is dangerously low in light of the monthly trade deficit currently being close to $2 billion (Dh7.34 billion) and the need to repay close to $1 billion of foreign debt in early 2009," said Flemming Nielsen, an analyst.

China agreed to provide $500 million in a concessional loan to help Pakistan meet its balance of payment needs in April and President Asif Ali Zardari hopes to secure another concessional loan of $500 million to $1.5 billion.