KARACHI, Oct 21: The rupee, after losing 80 paisa or 1.3 per cent value against the dollar in three days, made a slight recovery on State Bank's intervention. But it recovered modestly only after falling to a nearly three-year intra-day low of 61.50 a US dollar.

Sources close to the State Bank said the central bank sold dollars through a local bank to support the rupee. They said the intervention coupled with dollar selling by some banks on their own lifted the rupee to 60.42 a dollar, up 16 paisa from the Wednesday close of 60.58. Bankers offered different estimates of the SBP intervention but the one that Dawn found closer to reality was $12-15 million. Some bankers said the intervention was much larger, between $3-40 million.

Some bankers said the State Bank obtained the Rs60.42 per dollar closing rate by using tomorrow value or value tom as the bankers call it, of the rupee. "At 12:00 noon, the official closing hour for the exchange rate during the Ramazan, the rupee was trading around 61.30-61.40 a dollar," said a banker. "But the SBP used the rates quoted in value tom at around 1:30-2:00 p.m. for calculating the closing exchange rate (of Rs60.42 a dollar)." SBP officials made no comment on it. But the treasurer of a European bank, when reached by Dawn claimed that the closing rate "accurately reflected the market rate." "Since there was a lot of activity in the market the rates were changing quickly," he said.

Bankers said despite the fact that the rupee made a modest recovery on Thursday, it was set to weaken further in the days to come as demand for dollar has been on the rise on the back of widening trade deficit. Trade deficit in July-September 2004 rose to $839 million from $144 million a year ago. Bankers say an unusually high demand for dollars by importers suggests that the deficit in October would not be less than $300 million.

The rupee has fallen by 3.9 per cent since the new fiscal year started in July, falling to 60.42 a dollar on October 21, from 58.13 a dollar at end- June. The local currency has depreciated despite the SBP's interventions.