KARACHI :The State Bank of Pakistan (SBP) intervention helped the rupee recover to trade at 81.00 to the dollar on Monday, compared with Saturday's closing at 82.80/83.00, dealers said.
The rupee was quoted closing at 81.00/25 to the dollar, recovering 2.2 percent since Saturday's close.
Dealers said trade was thin amid uncertainty about the economic situation in regards to International Monetary Fund (IMF) assistance and foreign inflows.
"Everyone will remain cautious until there is some clarity on the economic front," said a currency dealer.
The State Bank's foreign currency reserves represent about six weeks cover for import payments.
There is growing speculation that Pakistan will turn to the IMF for support, possibly as early as this week, to weather the balance of payments crisis.
The government said earlier it would not seek an IMF package but Shaukat Tarin, the government's top economic adviser, said on the weekend Pakistan might need to borrow from the IMF if other multi-lateral lenders and friendly governments failed to help in the next few weeks.
According to the CNBC news channel, the government will ask for $10 billion from the IMF.
Officials from the Finance Ministry and the IMF are due to meet on Tuesday in Dubai to discuss Article IV consultation.
Article IV consultation is a regular, usually annual, comprehensive discussion between IMF staff and representatives of individual member countries concerning the member's economic and financial policies, according to the IMF's Web site.
RUPEE UNDER PRESSURE
The rupee sank to a record low of 84.40 to the dollar on Friday, at which point it stood 27 percent weaker than at the start of the year. As of Monday, the rupee has lost 24 percent this year.
Dealers said the rupee was under constant pressure because of import payments and a lack of inflows.
Analysts estimate Pakistan is in urgent need of at least $3 billion to $4 billion to help stabilise its economy.
Tarin said on the weekend he would make sure Pakistan does not default.
"Now, there is no danger," he told journalists after a news conference in Islamabad, but he warned that lenders were running out of time to come to Pakistan's rescue.
"We think we will be in a very good shape .... within the next 30 to 60 days," Tarin said of the prospects of sewing up funds to cover a balance of payments financing gap that the IMF estimates at up to $4.5 billion, and Pakistan reckons at $3.0 billion for the fiscal year ending on June 30 next year.
Dealers said the rupee could come under more pressure when a protective floor placed on the Karachi Stock Exchange (KSE) index was removed on Oct. 27, because of possible foreign selling and portfolio outflows. The floor was imposed in August.
The index has fallen almost 35 percent this year and ended flat on Monday at 9,184.75 points on very thin trade of 26,720 shares.
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