The rupee ended at 86.22/27 to the dollar, down from 86.05/10 in Friday. During the day, it touched a low of 86.32 to the dollar, but recovered before close, dealers said.

"There were three major oil import payments today, estimated around $125 million, and as dollar inflows are generally slower on Monday, it put pressure on the rupee," said a dealer at a foreign bank.

However, dealers said the rupee was unlikely to fall sharply in days ahead, as dollar inflows remain largely steady.

"Today's fall was only because of these oil payments, but I think the rupee will remain more or less steady for now as dollar inflows are pretty strong," said another dealer.

The rupee hit a record low of 86.50 in May, but has been steady since largely due to increased remittances from Pakistanis working abroad.

According to official data, remittances rose to a record $11.2 billion in 2010/11 fiscal year, an increase of 25.77 percent from the previous year.

In the stock market, the index ended lower but dealers said activity is likely to pick up soon as quarterly earning season nears.

"I think the companies with a history of healthy dividends as well as those with strong business models will see some interest over the next few days," said Sajid Bhanji, director at brokers Arif Habib Ltd.

The Karachi Stock Exchange's benchmark 100-share index ended 0.23 percent, or 28.28 points, lower at 12,318.24 on turnover of 57.34 million shares.

In the money market, overnight rates closed at the top rate of 13.90 percent, unchanged from Friday, as the interbank market continued to face tight liquidity conditions, dealers said.

Copyright Reuters, 2011