Following intervention from the State Bank of Pakistan (SBP), the exchange rate gained stability on Wednesday.
The rupee has seen 4.7 per cent devaluation in the last four working days.
The dollar was traded as high as Rs111 in the interbank market. But it remained mostly around Rs110.25-50, said currency dealers.
However, the SBP reported the bid price as Rs110.41 and offer price as Rs110.60, reflecting a level that was higher than the market rate.
Currency dealers said the SBP’s intervention was visible after three days of volatile fluctuations.
“Two large banks were selling dollars in the interbank market, which settled the greenback at less than Rs110.50. Banks got intimation during trading that the SBP was there to put a check on the dollar rate and that it should not cross Rs110.50,” said one currency dealer.
He said importers made a rush for buying, but it was not a panic-like situation because the dollar was available at the rate not different from the previous day’s value.
“Markets are volatile, but there is order to this chaos. You will see the rupee hasn’t traded much above Rs110.50 in the interbank market yet. Pressure from importers is relentless. However, the fresh inflow of $2.5 billion will keep the situation under control,” said Eman Khan of Tresmark, a financial terminal for live rates.
Currency dealers in the open market said that stability is temporary and the market can see further volatility.
The open market reacted accordingly and the dollar was traded at Rs110-111 during the day.