KARACHI, Oct 9: Pakistan’s overnight call rates and rupee stabilised on Thursday after the State Bank of Pakistan slashed banks’ cash reserve ratio to boost liquidity amid mounting concerns over economy.

The CRR cut did not have a direct impact on the currency, but the rupee recovered ground anyway, having hit a record low the previous day due to dollar demand to cover import payments and a brewing balance of payments crisis.

The rupee closed at 79.10/20, compared with Wednesday’s closing of 79.55/65 and record low of 80.30.

Intervention by the State Bank of Pakistan had helped the rupee recover on Wednesday, but dealers said it would remain under pressure until foreign currency inflows appeared.

“There has not been much trading today and the market is still a bit jittery,” said a currency dealer.

“Until we see supply, rupee will remain weak,” said another.

The rupee has lost 22.1 per cent so far this year but Shaukat Tarin, the newly appointed finance advisor to the prime minister, said the government expected the currency to stabilise “in the next few weeks”.

Overnight call rates traded at an average of 17 to 22 per cent, compared with a high as 38 per cent on Wednesday, sparking fears some banks could be in jeopardy, despite a statement by the central bank chief that the system could withstand market shocks.

Dealers expect call rates to remain steady around current levels in the coming days but some analysts said liquidity conditions may not improve in the long term due to the external deficit and heavy government borrowing from the central bank.—Reuters