KARACHI, July 9: The falling rupee bounced back on Wednesday as it gained 3.2 per cent against the US dollar which was the direct outcome of a series of measures taken by the State Bank of Pakistan on Tuesday.

Currency dealers in the inter-bank market said dollar-rupee parity witnessed fluctuations as it first dipped to Rs71.40, then rose to Rs72.10 and finally settled at Rs71.40-71.50.

The SBP has suspended forward booking of dollars, reduced trading time, curtailed advance payment against imports from 50 to 25 per cent and announced to make payments for oil imports.

These steps suddenly reduced the demand for the greenback while the SBP told the market that it was ready to buy at Rs71.4850, said a currency dealer.

Corrective measures by the SBP were necessary to arrest the fast depreciation of the rupee, and these supported the local currency to regain its lost value against the dollar, said a dealer.

Since beginning of the current month, the rupee lost 7.2 per cent and importers and manufacturers started questioning the viability of their sectors. This mounted pressure on regulators to stop free fall of rupee.

However, few analysts said the steps which stopped deprecation of rupee would not last for a longer period.

“The market demand is the same and will rise with economic growth. The country needs higher inflows and reserves of the dollars to stabilise the exchange rate,” said Atif Ali, a currency dealer.

The inflows through portfolio investment are almost negative, foreign direct investment has declined and expected inflows from friendly countries are still out of sight.

“The government should speed up its privatisation process and launch the proposed Global Depository Receipts (GDRs) to bring dollars which are required to meet the record trade and current account deficit,” said an analyst.

He said that the inflow of dollars is also needed to protect rupee from strong world currencies, including US dollar as depreciation of rupee is ‘multidimensional.’

The rupee lost value against all major currencies, like euro, British pound and Japanese yen.

The fast depleting reserves of the country are sending wrong signals to speculators in the currency market and they are still hoarding dollars waiting to get maximum benefit.

“I did my best to persuade them to sell dollars, but currency hoarders, especially small hoarders, were not ready to sell them. How much benefit they want from the dollar is not known,” said a currency broker.

He said those having several hundred dollars were in real panic with the fall of dollar against rupee, but they decided to keep it with them till it reaches a level they have set in their mind.