Pakistani rupee ends firmer; stocks up; o/n rates flat

KARACHI, March 5 Mon Mar 5, 2012 7:52am EST

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KARACHI, March 5 (Reuters) - The Pakistani rupee ended firmer on Monday amid a lack of import payments, but dealers expect it to come under pressure following an increase in international oil prices.

The rupee closed at 90.85/90 to the dollar, compared to its close on Friday of 90.98/91.04.

"Import payments are likely to increase because of higher global oil prices and ... we may see the rupee weaken further in the coming days," said a bank dealer.

Oil was trading at around $123 a barrel on Monday.

The rupee touched a record low of 91.28 to the dollar in January, pressured by concerns about higher payments for oil imports and Pakistan's overall economic health.

The State Bank of Pakistan warned last month that financing the country's projected current account deficit would be a challenge.

The current account recorded a provisional deficit of $2.633 billion in the first seven months of the 2011/12 fiscal year, compared with a $96 million deficit in the same period last year, according to central bank data.

The deficit is expected to widen further in the coming months because of debt repayments and a lack of external aid.

Islamabad started repaying an $8 billion International Monetary Fund (IMF) loan last month with a $399 million payment.

Dealers said they were also cautious after the IMF advised Pakistan to take immediate steps to tackle growing budget pressures and raise interest rates to contain inflation.

The central bank kept the key policy rate flat at 12 percent for the next two months in its monetary policy announcement in February.

The IMF last month projected a widening of Pakistan's budget deficit in the 2011/12 fiscal year to 7 percent of gross domestic product, compared with the government's revised budget target of 4.7 percent.

Pakistani stocks, led by middle tier shares ended 1.45 percent higher on Monday.

The Karachi Stock Exchange (KSE) benchmark 100-share index rose 189.34 points, higher at 13,278.31 points.

Turnover rose to 295.14 million shares, compared with 253 million shares traded on Friday.

Volume leader Jahangir Siddiqui financial group ended 10.67 percent higher at 10.37 rupees, Bank Alfalah closed up 6.88 percent at 15.53 rupees, and Arif Habib Corp gained 3.33 percent to end at 32 rupees.

In the money market, overnight rates were unchanged at their top level of 11.90 percent amid tight liquidity in the interbank market. (Reporting by Sahar Ahmed; Editing by Qasim Nauman and Chris Allbritton)

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