Karachi - The Pakistani rupee slipped to an all-time low against US dollar amid continued domestic foreign currency shortages and an international rally on the dollar, dealers said Friday.

The hardest hit was the rupee's performance in the inter-bank market where it touched up to 65 to close at 64.90/64.93 to the dollar as compared with 64.52/64.54 on Wednesday.

In an unofficial open market, the rupee also dipped to 66.02/66.05 against the dollar in physical trading, though most traders showed rates of 65.70.65.90 to the dollar on their websites.

"If you go in the market to buy dollars you will not get anything lower than 66," said Nabeel Iqbal, Marketing Manager at Khanani & Kalia, the country's largest exchange firm.

Iqbal said the rupee was down due to twin factors. Firstly, the dollar was strengthened in an overnight rally in New York on Thursday against all major currencies including a significant recovery against the euro. Secondly, the domestic market is already under tremendous pressure as central bank reserves are dwindling and exports are sluggish while imports are rising.

"The rupee will remain under pressure in coming weeks as we don't see any major improvement in economic fundamentals," Iqbal said. Another reason for the rupee's decline is fiscal year-end buying, analysts said.

Pakistan's fiscal year ends on June 30.

"Traders and bankers are covering their positions ahead of the fiscal year end. This kind of heavy buying for the dollar is quite normal during this time of the year," said Rehanuddin, treasury dealer at Invest Cap Securities.

The central State Bank of Pakistan (SBP) from Wednesday started implementing tighter rules to control rupee's downward spiral.

The SBP reserves are down by over 4 billion dollars during the last five months to 12.65 billion dollars last week and dealers and bankers expect the reserves will go down to 10 billion dollars by June 30.

The rising international oil price is a major factor in eroding reserves, shooting up trade deficit by 45 per cent to 14.5 billion dollars from July to March, according to Federal Bureau of Statistics. (dpa)