KARACHI: The ministry of finance and the State Bank decided to intervene to quell speculation and check volatility as the US dollar bounced back to Rs99.50 in the inter-bank and Rs102 in the open market on Friday.

The government achievement to bring back dollar from Rs109 to Rs98 was undermined as dollar gained Rs1.50 on Thursday, but it was frozen at the same level on Friday. However, the open market was short of dollars while sellers disappeared from the market. Exchange companies were invited in the State Bank on Friday and asked to explain the situation.

The money changers blamed speculators who exploited the situation. Sources said the finance minister had advised the State Bank to supply dollars in the open market and bring back the dollar at the level of Rs98.

“The State Bank has assured that the supply of dollar will begin from Monday for the open market,” said Malik Bostan who met the acting Governor of State Bank.

He was sure that the dollar will fall back below Rs100 in the open market soon after the resumption of dollar supply.

He said the exchange companies have deposited around $100 million in the State Bank during a week before this shortage grabbed the market.

Currency dealers said that $10m open market would fall once the supply starts as it happens many times earlier.

The currency dealers were expecting high trading volume on Friday, being last trading day of the inter-bank, but the market remained dull.

“Not much buyers were there and it seems that the market was influenced indirectly to stop the dollar from upward advancement,” said Atif Ahmed, a currency dealer in the inter-bank market.

Currency dealers and experts said the exchange rate would take eight to 10 days to settle down while they believe the inter-bank market may settle between Rs98-100.

“The dollar could have gone further down had the government not indicated that Rs98 is the last destination of the dollar and this was done due to mounting pressure of exporters,” said Bostan.

The textile sector received the biggest blow due to sharp devaluation of dollar. Textile brings 60 per cent of the country’s total export proceeds.

The representatives of the textile body while appreciating the achievement to bring back the dollar at Rs98, demanded compensation through other measures, like providing loans under export refinance at 3pc.