Rupee weakens 4.82pc

KARACHI: The rupee ended almost flat on Friday but has weakened 4.82 percent in 2011, mainly because of import payments and a bleak outlook for the country's economy. Dealers said the pressure is likely to continue in 2012.

The rupee lost 1.53 percent in 2010.

It ended at 89.95/90.00 to the dollar, compared with Thursday's close of 89.96/90.01. The rupee was traded at its record low of 90.03 on Wednesday.
"The rupee remained stable during the first half of the year, but emergence of weakness in the external account...exerted pressure on the rupee towards the latter half of the year," said Nauman Khan, an analyst at Topline Securities.

The country's current account deficit stood at $2.104 billion in July-Nov compared with $589 million in the same period a year earlier.
The deficit is likely to widen further in the coming months because of debt repayments and a lack of external aid.

Islamabad has to start paying back an $8 billion International Monetary Fund loan in early 2012. Without additional sources of revenue, analysts said, its foreign exchange reserves may come under pressure.

More than $1.1 billion are due in the second half of the 2011/12 fiscal year.

Foreign exchange reserves were at $16.77 billion in the week ending Dec. 23, compared with a record $18.31 billion as of July 30.

There were also concerns about growing tensins with the West in 2011 which could choke off much needed foreign aid.

The United States is the biggest donor to Pakistan and has allocated some $20 billion in security and economic aid since 2001, much of it in the form of reimbursements for Pakistan's assistance in fighting militancy.

In May, U.S. special forces found and killed al Qaeda leader Osama bin Laden in a town near Islamabad capital, exacerbating a crisis in relations.

Later in November, ties worsened again after a cross-border NATO air attack killed 24 soldiers. (Reuters)