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Pakistan rupee tumbles to seven-year low

Pakistan's rupee, Asia's second-worst performer this year, fell to the lowest since 2001 on speculation record oil prices will increase the nation's import bill, widening its trade deficit.

  • Bloomberg
  • Published: 23:40 April 21, 2008
  • Gulf News

Karachi: Pakistan's rupee, Asia's second-worst performer this year, fell to the lowest since 2001 on speculation record oil prices will increase the nation's import bill, widening its trade deficit.

The currency extended an eight-week decline, the longest losing streak since June 2005, as crude oil in New York climbed to an all-time high of $117.40 per barrel.

The nation buys as much as 85 per cent of its oil overseas. Pakistan's import growth averaged 47 per cent in the March quarter, almost six times faster than a year earlier, according to government data.

"The rupee is falling on more demand for dollars," said Syed Nabeel Iqbal, head of trading and research at Karachi-based foreign-exchange firm Khanani & Kalia International Ltd.

"The trade deficit is already high. Now, oil and other imports are keeping the demand for dollars high.''

The rupee fell 0.3 per cent to 64.11 per dollar, the lowest since October 2001, according to data compiled by Bloomberg. The currency's 3.5 per cent decline this year is the biggest after the South Korean won among 15 most-traded Asian currencies.

The nation's trade deficit increased 45 per cent in the nine months through March to $14.5 billion from a year ago, according to data from the Islamabad-based Federal Bureau of Statistics.

The currency had the biggest weekly gain in more than six years following the February 18 elections that paved the way for a coalition government led by rivals, the Pakistan Peoples Party and former prime minister Nawaz Sharif's Pakistan Muslim League-Nawaz.

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