Pakistani rupee trades at record low

Karachi: Pakistan's rupee was headed for a fourth straight weekly loss against the dollar, trading at a record low on concerns over strained relations with the US and a flagging economy, deterring overseas investors.

Pakistani forces yesterday fired warning shots near two US military helicopters that it said had crossed into the country's airspace from Afghanistan.

The incident occurred two weeks after the nation's army chief said cross-border incursions would not be tolerated.

A bomb attack at Islamabad's Marriott hotel on September 20 killed 53 people and security at airports was increased yesterday, following threats of further strikes.

"Unsettled relations with the US due to tensions on the Pakistan-Afghan border, bombings and an already weak economy leave little room for the rupee to recover,'' said Farhan Rizvi, an economist at J.S. Global Capital Ltd in Karachi.

"If the situation remains as it is, foreign funds will be pulled out.''

The rupee was little changed from late on Thursday at 78.30 per dollar - the weakest since compilation of data on the currency started in Dec-ember 1988, as of 12.15pm in Karachi (11.45pm UAE time) yesterday.

It fell 0.5 per cent last week and has tumbled 21 per cent this year, the fourth-worst performance among currencies tracked by Bloomberg.

Pakistan's economy has "deteriorated" since the nation's credit outlook was lowered to negative in May, Standard & Poor's said yesterday.

Moody's Investors Service last week cut Pakistan's credit outlook to "negative", saying the country may face difficulties repaying foreign debt. The company rates the nation's debt five levels below investment grade.

Pakistan's inflation accelerated to the fastest in more than 30 years in August, as foreign reserves have almost halved in the past year.