The rupee continued to recover for the fourth consecutive session on Wednesday as it strengthened by Rs1.79 against the dollar in the interbank market.

The local currency closed at Rs231.12 per dollar, according to the State Bank of Pakistan. This equates to an appreciation of 0.77 per cent from yesterday’s close of Rs233.91.

Saad bin Naseer, director of financial data and analytics portal Mettis Global, said there was “panic selling” in the open market and exporters who had been keeping their proceeds abroad were now bringing them back to the country. This had improved things on the supply side, the effect of which was also being seen in the interbank market, he commented.

“The open market is driving the interbank market right now,” he added.

However, since the dollar was strengthening internationally, the rupee was not expected to make significant gains, Naseer said. “The dollar’s range will remain between 220-225.

“The dollar will not become too cheap after [Ishaq] Dar’s return because we will import many commodities, including wheat and cotton, in the aftermath of floods this year. Consequently, imports will remain high and this pressure will not allow a decrease in the dollar’s value.”

Forex Association of Pakistan (FAP) Chairman Malik Bostan said the market was reacting positively to Ishaq Dar’s upcoming appointment as the new finance minister and expectation of strict action against hundi/hawala networks.

He noted that the dollar rate, which was previously around Rs8 higher in the open market, had narrowed with the greenback being sold for 50 paise less there compared to the interbank market.

Bostan said the import bill was expected to dip on the back of a decline in global crude prices, which would help lower the trade deficit.

The FAP chairman called for strict action against banks that had “earned billions after artificially raising the dollar’s price”, adding that he hoped such banks would be penalised after Dar’s return.

The rupee, which had fallen close to the all-time low of Rs239.34 on Sept 22, has been recovering since Friday. It has strengthened by Rs5.8, or 2.42pc, in the last three sessions.