KARACHI   -  After continuous devaluation for seven consecutive days, the Pakistani rupee on Tuesday recovered its strength by 50 paisas in the open market and 30 paisas in the inter-bank market. Subsequently, the rupee was traded at Rs156.65 in the interbank and Rs156.75 in the open market. After this development, the widespread speculations about the currency’s ‘free-float’ have lost their support.

Analysts are of the view that the further devaluation is restrained following the press conference of the governor of the State Bank of Pakistan (SBP), Reza Baqir, who said that Pakistan had accepted all conditions of the International Monetary Fund (IMF), and expressed hope that the global moneylender would approve the bailout to Pakistan on July 3.

Furthermore, following the approval, other international financial institutions are also likely to extend financial assistance to Pakistan, which in consequence would result in high inflows of the greenback.

The volatility in the currency market had subsided in the days prior to Eid-ul-Fitr amid high inflows during the festive season.

According to economists, Pakistan’s monthly average imports are around $4 billion, while exports are only $1.7 billion. The remittances help recover the fiscal deficit to some extent, but the demand of the greenback remains high due to payments of the state’s loan.

In the previous week, Pakistani rupee was depreciated by 4.9 percent against the US dollar as the greenback gained Rs7.25 and touched another historical high.

In the interbank market, the US dollar closed at Rs155.85 on Friday, which in consequence had raised Pakistan’s external debts by Rs725 billion. In the open market, the US dollar closed at Rs157.50, which in turn increased prices of goods, and hardships for the general public.

The interbank rate is the benchmark rate to determine the value of dollar and sets the direction for open market rates.

Since open market or cash market rate usually remains higher than the interbank rate, the open market is likely to follow a similar trend.