Pakistani rupee hits fresh record low at 89.93 to dlr

KARACHI, Dec 15 (Reuters) - The Pakistani rupee hit a record low on Thursday, which dealers said stemmed from the bleak outlook for the country’s economy but ended firmer because of possible central bank intervention, dealers said.

“The rupee was traded at 89.93 (to the dollar),” said a bank dealer, adding that “It is really the sentiment which is negative.”

The rupee ended at 89.62/67 to the dollar, compared with Wednesday’s close of 89.55/61.

Dealers said the central bank may have intervened and sold dollars to support the rupee.

Exporters held on to their dollars because of the bleak economic outlook, putting further pressure on the rupee, dealers said.

Pakistan’s current account deficit stood at $1.6 billion in July-Oct compared with $541 million in the same period a year earlier. The current account deficit is likely to widen in coming months because of debt repayments and a lack of external aid.

Islamabad has to begin repayments on an $8 billion IMF loan in early 2012, and without additional sources of revenue, its foreign exchange reserves may come under pressure, analysts say.

It has to make a repayment of more than $1.1 billion in the second half of 2011/12 fiscal year.

Foreign exchange reserves were at $16.69 billion in the week ending Dec. 9, compared with a record $18.31 billion as of July 30.

Dealers also said tense relations with the United States also put further pressure on the rupee.

In part, the Pakistani rupee’s fall reflects pressure most regional currencies are facing as worries about Europe’s debt crisis and the global economy drive investors out of riskier assets.

Stocks ended lower, taking cues from regional markets and following House approval of the U.S. defence bill, dealers said.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index ended 1.43 percent, or 161.47 points, lower at 11139.52 on turnover of just 52 million shares.

In the money market, overnight rates closed at its floor of 9 percent, compared with Wednesday’s close of between 9.25 percent and 9.75 percent because of scheduled inflows of 90 billion rupees ($1 billion).