KARACHI, Aug 5: The rupee on Thursday recovered six paisa per US dollar after losing 50 paisa or 0.9 per cent of its value earlier this week. Bankers said the rupee closed at 58.86 a dollar up slightly from 58.92 on Wednesday after the State Bank sold around $25 million to lift it.

But they said that the local currency did touch an intra-day low of 59.05 per dollar on importers demand that was partly speculative in nature. Importers are making heavy dollar booking against fake buying contracts aggravating the pressure on the rupee that has already been under pressure due to rising trade deficit and faster outflow of foreign exchange in the wake of forex market liberalization.

Trade deficit in July 2004 rose to $189.4 billion from $109.5 billion in July 2003. But it was much lower than the June 2003 deficit of $613 million. That is why the central bank does not seem to buy the theory that the trade deficit is the key reason for the recent fall in the rupee value.

It is rather more concerned about speculative forward buying of dollars by industrial importers against fake purchase orders. On Wednesday the rupee was seen trading as low as 59.30-59.40 a dollar but due to heavy intervention by the State Bank it had finally closed at 58.92.

Some bankers said the Exchange & Debt Management Department of SBP made frantic phone calls to banks on Thursday asking them not to quote dollar rate beyond Rs58.90 to each other. "We told the banks to do this because we had made it clear to them that those needing dollars should come to us and buy at this rate," a senior SBP official told Dawn.

The official who declined to go on record admitted that verbal strictures issued by EDMD annoyed some bankers but he justified the same saying that SBP had not stopped any bank quoting higher rates for the customers.

"If there was some customer demand banks were free to quote their own rates but SBP did ask them to remain range-bound in quoting rates for each other," said a banker close to the SBP.

Some bankers told Dawn that the central bank had imposed sort of a temporary cap on exchange rates to keep the rupee from falling further. But head of treasury of the State Bank Zafar Shaikh rejected this statement. "It is all baseless," he said.

He said the SBP was closely monitoring the exchange rates and "will check speculative trading." Bankers said he had warned several banks over telephone that the banks found involved in speculative trading of dollars would be taken to the task. The rupee has lost 74 paisa or about 1.3 per cent of its value against the US dollar from July 1 till date.