The rupee was quoted at a record low on Thursday because of the global financial crisis and concern about tension between Pakistan and the United States over US attacks on militants in Pakistan, dealers said.

Dealers said the rupee was quoted at 77.45/60 to the dollar at 10:28 a.m. (0428 GMT), after being quoted at 77.65/75 earlier, compared with Wednesday's closing of 77.18/23.

Dealers said trades had been made as high as 77.60 rupees to the dollar.

"One of the main reasons is the global financial crisis where some foreign banks have been asked to cut down their exposure in Pakistan," said a currency based dealer.

Two US legendary firms bit the dust over the weekend, Lehman Brothers Holding Inc filed for bankruptcy and Merrill Lynch & Co CEO John Thain struck a deal to sell out to Bank of America.

The US government then bailed out insurer AIG for $85 billion.

US shares prices plummeted to three-year lows and forced increasingly desperate major banks to scramble for merger partners.

Dealers said the market was nervous about the situation on the Pakistan-Afghanistan border after a US missile strike killed five militants on Wednesday hours after the top US military officer said the United States was committed to respect Pakistan's sovereignty.

Dealers said that the market was short of dollars also because of the State Bank's buy/swap operations.

The State Bank of Pakistan (SBP) has been buying dollars in the ready market with a simultaneous commitment to sell dollars back at future dates, they said.

The rupee traded at a record low of 77.65 on Wednesday.