The Pakistani rupee gained over Rs10 against the US dollar in the interbank market on Tuesday, in the first trading session after the country secured last-minute funding from the International Monetary Fund (IMF).

According to the State Bank of Pakistan (SBP), the local currency closed at Rs275.44 per dollar, up 3.83 per cent.

The rupee stood closed at 285.99 against the dollar on June 27. Markets were shut for the Eid holidays last week and a bank holiday on Monday.

Alpha Beta Core CEO Khurram Schehzad said the approval of the stand-by agreement with the IMF was the main reason for the decline in the dollar in the domestic market.

Tresmark’s Head of Strategy Komal Mansoor predicted that the market may stabilise around the 272-276 range for today. “The central bank will be instrumental in guiding the currency levels there after,” she said.

Mettis Global Director Saad bin Naseer said that those who were hoarding dollars will panic once foreign exchange reserves start building.

“And if this happens, then you will see an increase in remittances with banking channels because the hundi-hawala won’t take a risk,” he said.

Currency dealer Zafar Paracha said that the IMF agreement had had a positive effect on the economy as investor confidence had been restored. He hoped that foreign investment would also increase in the days to come.

He said that the government needed to focus on bringing down the dollar rate low and let it remain there. He said that Pakistan’s financial credentials were “good” and the only area in which the country lacked was management, adding that the government should also review its policies.

The shortage of cash rupee due to bank holidays provided an opportunity to several money changers to buy the dollar on their own available rates, which was in the range of Rs275 to Rs285 on Monday.

The first day trading of the open market after Pakistan’s Standby Agreement (SBA) with IMF for $3 billion created sense of economic stability with better price of the rupee. Due to bank holidays, only a few exchange companies had cash rupees, and even that was limited. Most of the companies were unable to buy dollars despite the rush for sale.

Exchange companies said that there were only sellers; no buyers for dollars were available. In fact, the open market has lost most of its business with banks due to the State Bank of Pakistan’s decision, which allows banks to purchase dollars from the banking market instead of exchange companies.

Additional input from Reuters