|
Karachi: The Pakistani rupee marked a record closing low yesterday on investor fears persistent political tension and a weak economic outlook would drag on the currency in coming weeks.
Two traders said the rupee closed at 76.60/70 and 76.65 against the dollar. The rupee's previous record-low closing of 76.60/65 was struck on August 16, according to Reuters records. It hit an all-time intra-day low of 77.15 on Friday.
The rupee has lost 24 per cent against the dollar this year, and pressure has mounted on the central bank to intervene to stop its dive.
But analysts said the cash-poor central bank is in a tight spot because it cannot afford to buy the rupee, and that key support for the currency will only come from an accumulation of foreign reserves, which to happen quickly would require foreign fin-ancial aid.
"We need to have foreign reserves and it is not the job of the central bank to go around borrowing money," said Asif Ali Qureshi, an analyst at Invisor Securities.
Pakistan is in talks with Saudi Arabia to defer an estimated $5.9 billion worth of oil payments, and seeks over $1 billion in loans from the World Bank and the Asian Development Bank.
After six years of healthy growth under former president Pervez Musharraf, who quit on Monday to avoid being impeached by the coalition government, Pakistan's economy began hitting tough times last year.
Inflation is soaring, high oil prices have depleted reserves, and trade and fiscal deficits are widening.
Pakistan's foreign reserves are now worth less than three months of imports, raising fears among investors the country cannot pay for its foreign purchases.
"The [economic] fundamentals are stuck against us. If the rupee closes at 77, we will see 80 very soon," said a trader.
A decision may be imminent on whether to restore judges deposed by Mush-arraf last year, an issue that threatens to tear the governing coalition apart.
Former prime minister and the chief of the second-biggest party in the coalition, Nawaz Sharif, quit the alliance yesterday.
Stocks decline
Pakistani stocks fell 1.8 per cent to close at a near two-week low yesterday as mounting investor doubts about whether the coalition government will stay intact spurred selling in financial stocks such as MCB Bank.
The benchmark Karachi Stock Exchange index closed down 1.8 per cent at 9,813.66 points, a level last seen on August 13.
Investors said they were sceptical the coalition can quickly resolve the outstanding issues threatening to tear the alliance apart, including the restoration of judges ousted by former President Pervez Musharraf last year.
"Investors are viewing the [political] meetings sceptically," said Mustafa Iqbal, head of institutional sales at AKD Securities.
"If the coalition splits, the chances of a harmonious government in the next five years are not going to be there," Iqbal said.
The Pakistani stock market, which rose for six straight years from 2002, and was one of the top performers in Asia during that period, has lost about a third of its value this year.
As of Friday's close, it was the third worst-performing market in Asia after China and Vietnam.
Pakistan's sickly economy has dragged on the market. Inflation is soaring, high oil prices have depleted reserves, and trade and fiscal deficits are widening.
MCB Bank was down 3.8 per cent. The National Bank of Pakistan fell five per cent. Standard Chartered Bank Pakistan was down 5.3 per cent.
|
