KARACHI, Aug 18: The resignation of former President Pervez Musharraf injected a sudden strength to the rupee which appreciated by over four per cent against the US dollar in open market on Monday.

Currency dealers said they traded the dollar at Rs73.50 while the market closed about Rs74 per dollar.

“It was generally believed that the former president will not resign and the impeachment will further destabilise the situation. However, the resignation changed the entire situation and the market filled with the dollars,” said Malik Bostan, owner of an exchange company, and president of the Forex Association of Pakistan.

He said that the hoarders rushed to the market to sell dollars fearing that any further delay could cause more devaluation of dollar.

Malik said that the market could see a further devaluation of dollar on Tuesday, but it depends on how inter-bank market reacts to the resignation.

The inter-bank market was closed before the speech was over as the announcement of resignation came at the end of the speech.

The inter-bank market closed at Rs76.10, said a currency dealer who feared that a sharp devaluation of the dollar would deprive exporters of hundreds of millions of rupees.“The loss of about Rs3 in the kerb market is a clear indication that the dollar in inter-bank will see a sharp decline on Tuesday,” said Atif Ahmed, a currency dealer.

He expected that the market would see a rush of sellers as fears of a decline in the US currency would bring those exporters who have kept their proceeds in the hope of a further rise of dollar.

Atif said importers who bought dollar at Rs76 and above would find themselves ruined as cost of their imports would be much higher than the cost of those who would buy dollar at a lower rate.

Currency dealers said if the dollar is devalued by just Rs2, importers who have been buying dollars at Rs76 and above would be in serious problem as their products would become uncompetitive in the market.

“I can see a rush in the inter-bank market as those holding dollars will not take a risk when the currency is losing its weight,” said Abid Saleem, a market watcher and analyst.

Analysts said the sudden rise in stock market which went up by 450 index points, was another booster for the market sentiment and an indication that a tussle at the highest level was over.

Most of the analysts said the market was expecting long process of impeachment of the former President and a longer period of destabilization at political and economic front. However, the resignation suddenly vanished all speculations and stability was visible.

“This positive change could be a bubble change if the issue of restoration of judges is not solved within a given time,” said Saleem.

He said the market is now expecting quick resolution of the judges’ issue so that a longer stability could be achieved.