September 30, 2010Print : Business
KARACHI: The rupee weakened to a new record low against the dollar on Wednesday as hectic buying for import and corporate payments continued, dealers said.
The rupee shed another seven paisas to close at 86.25 to a dollar on Wednesday from the previous record low of 85.18 on Tuesday.
“The market witnessed heavy buying for import and corporate payments, which jacked up the dollar demand during the day,” a dealer said.
Currency dealers said that uncertain economic conditions on implementation of reformed general sales tax (RGST) and expected enhanced imports in the post-floods scenario devalued the local currency.
The government is reportedly implementing RGST from October 1. The dealers said that the implementation of RGST would inflate prices resulted in higher inflation.
The dealers also said that the dollars are being bought for import payments, which would increase in the coming days as flash floods destroyed agriculture crop on a vast area.
According to the government estimates, the agriculture sector, which accounts for 21 percent of the GDP and 45 percent of employment, has been hit hard.
An estimated eight percent of the total cropped area has been flooded with very significant damage to the industrial crops, ie, cotton, sugarcane, wheat, vegetables, fruits and livestock.
The inter-bank forex market started the day in the range of Rs86.20 and Rs86.24 against the dollar. The higher demand for dollar prevailed throughout the day as the dollar touched a low of Rs86.18 and a high of Rs86.28.