KARACHI: Volatility in the currency markets may persist for another three days, currency dealers and experts project.

The dollar behaved erratically during the week, hitting the high at Rs103.30 on Monday and falling below Rs101 the next day, and then crossing Rs102 level again. On Friday, it settled below Rs102.

The first Monday of September is observed as Labour Day in the United States and entire business will remain closed, which means local forex markets would now start operating from Wednesday due to time difference.

The open market, which remained open on Saturdays here, was dull compared to earlier days of the week.

“There was no panic, buyers and sellers were equally active as we sell the dollar at Rs101.70 and purchased at Rs101.50,” said Anwar Jamal, a currency dealer.

However, the inter-bank market fear more shocks as large payments to the IMF are due next month. Both the exporters and importers are trying to avoid dealing in the currency market as fluctuations were too high during the week.

Bankers have been complaining that the exporters were not sending their export proceeds to the market apparently trying to capitalise on fluctuations in the dollar value. The impasse in Islamabad has generated uncertainty that deepened after the protests spread to other cities, including Karachi and Lahore.

Currency experts and analysts want the situation to be resolved as soon as possible. “If it persists for another week, the uncertainty will hit the confidence on local currency and the country will see a large dollar outflows through legal as well as illegal channels,” commented a market watcher.

Currency dealers also pointed out the difficulties while dealing with the IMF as the lender has yet not released the tranche that was due in August. This week Pakistan received $371m as Coalition Support Fund which helped exchange rate to stabilise a little bit. However, it may not support for any longer period.

The government seems unable to offer any long-term commitment, and the IMF also likes to see the political impasse end.

Published in Dawn, August 31th, 2014