Pakistani rupee falls to new lows

The rupee has fallen to three-year lows

The Pakistani rupee has fallen to fresh three-year lows against the US dollar amid worries over the soaring cost of the country's oil imports.

The rupee was quoted at 61.30/61.40 to the dollar on Monday, compared with 60.80/60.85 on Saturday.

Analysts blamed demand for dollars from oil importers, who are currently facing a $35m (2.1bn rupees) bill.

They predict pressure on the rupee will continue until Pakistan's central bank pumps extra dollars into the market.

Other factors

"There is a nervousness in the market, and everyone wants to cover their positions" said a senior foreign exchange dealer in Karachi.

"That's why dollar demand is rising."

But currency experts said any central bank intervention would only bring temporary relief, because Pakistan's low interest rates and a recent slide in the value of the rupee had made the dollar more attractive to investors.

"The central bank should rationalise interest rates, otherwise the rupee will continue to fall," said one dealer.

Last week, the central bank twice sold dollars onto the markets in an attempt to life the rupee.