The rupee touched its lowest on Sept. 30 last year when it traded at 86.35 to the greenback and according to the central bank the local unit was also traded on the same level on Friday.
"The future prospects look bleak and there are also some payments in the market," said a dealer at a foreign bank.
The rupee closed at 86.23/33 to the dollar, and has lost 1.8 percent this month, more than its total loss in 2010.
"The rupee also traded at 86.40 in TOM (one-day forward) market," said another dealer.
The rupee made an 11-month high at 84.15 in April due to a rise in remittances and exports.
Remittances from overseas Pakistanis increased by 23.81 percent to more than $9 billion in the first 10 months of the 2010/11 fiscal year, with $1.03 billion received in April, according to the State Bank of Pakistan.
Dealers said market sentiment has affected the local unit's performance as Bin Laden's killing and its aftermath has added to uncertainty and an attack on a US consulate convoy in further weakened the rupee.
Stocks ended higher as bargain hunters bought energy shares but turnover remained low as investors were cautious ahead of the monetary policy and budget announcements for 2011/12 fiscal year, dealers said.
The monetary policy is due to be announced on Saturday while the budget for 2011/12 fiscal year is due to be announced on May 28.
The Karachi Stock Exchange's benchmark 100-share index ended 0.80 percent, or 94.57 points, higher at 11,973.38 on turnover of 44.37 million shares.
In the money market, overnight rates ended at 13.75 percent, compared with the previous day's close of 13.90 percent after the State Bank of Pakistan conducted a seven day reverse repo and bought back government paper worth Rs.34 billion ($396 million).