The rupee continued to extend gains against the dollar on Wednesday, rising by approximately Rs1.7 in the interbank market by close.

The local currency closed at Rs223.94 per dollar, according to the State Bank of Pakistan (SBP). This equates to an appreciation of 0.76 per cent from yesterday’s close of Rs225.64.

Earlier, Forex Association of Pakistan (FAP) data showed the local currency gained Rs2.04 — an appreciation of 0.9 per cent — against yesterday’s close of Rs225.64 by afternoon. It later settled 30 paise higher.

Analysts have attributed the strengthening of the rupee primarily to a reduction in the country’s import bill in September and expectations that the new finance minister, Ishaq Dar, would take measures to stabilise the current rate.

“September’s lower imports are helping the PKR. Moreover, there is speculation that the new finance minister may take steps to stabilise the local currency,” Mohammed Sohail, chief executive officer of brokerage house Topline Securities, told Dawn.com.

Similarly, Exchange Companies Association of Pakistan (Ecap) General Secretary Zafar Paracha also highlighted the shrinking of the import bill last month and reduction in trade deficit by 20pc on a monthly basis as two of the factors behind the rupee’s upward momentum.

“Inflation is also declining, increasing hopes of no further stringent measures in the monetary policy,” he said, adding that the rupee was expected to make further gains in the coming days due to these factors.

Paracha also linked the rupee’s appreciation to “strict measures” taken by the government to strengthen it.

In this regard, he particularly highlighted the action taken against hawala/hundi networks by the new finance minister. Following the action, he said, elements that had been “artificially increasing” the dollar’s value had started selling hoarded dollars.

As a result, a decline was also observed in the demand for dollars in the open market as well, he added.

Among other measures, the government has launched investigations regarding the role of banks in exchange rate manipulation.

State Bank of Pakistan (SBP) Governor Jameel Ahmad informed the National Assembly’s Standing Committee on Finance and Revenue on Tuesday that investigations had been launched against eight banks.

Bank Al Habib, Habib Bank Limited, National Bank of Pakistan (NBP), Meezan Bank Limited, United Bank Limited (UBL), Allied Bank Limited (ABL) and Standard Chartered were being investigated in the first phase, Ahmad disclosed. However, he did not name the eighth bank.

Show-cause notices had been issued to ABL, NBP and Standard Chartered, he informed the panel, adding that the rest of the banks would be investigated in the next phase.

Earlier, Dawn reported that banks had doubled their buying of the US currency and were sending it abroad via credit cards while the government grappled to control greenback outflows.

Subsequently, in a media talk last week, Dar said nobody would be allowed to play with the exchange rate.

“This is not the right place where the rupee stands at present,” he had said, adding that he knew some speculators were involved in this game that they should stop forthwith.