The US dollar fell more than a rupee in the interbank market Thursday morning as the International Monetary Fund approved $6 billion loan programme for Pakistan and dispatched the first tranche of $1 billion on July 3.

The Washington-based lender confirmed the development in a statement on Wednesday, pushing the exchange rates down in an otherwise uncertain market.

The greenback was trading at Rs156.5, down Rs1.8 from previous day’s closing rate of Rs158.3. 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. The greenback was trading at Rs157.5 in the open market when it closed on Wednesday.

Because of uncertainty around the dollar rates, the spread between buying and selling price was also high, up to Rs4 in some cases against the normal range of Rs1 to Rs2. SAMAA Digital confirmed this by visiting three currency dealers.

In the last week of June, the dollar had increased sharply to its all-time high of Rs164.2 against the rupee. It surged by Rs8 in a couple of days, witnessing its biggest one-day rise of the year on June 27. However, it fell back to Rs160 this month as Pakistan implemented what critics call an “IMF budget” starting from July 1.

Ahead of Wednesday’s final approval, the rupee kept appreciating as dollar fell to Rs158 level before sliding further to its current level shortly after the country received the first tranche of the three-year loan program, the country’s 13th bailout program since the 1980s.

The foreign currency market remained uncertain, at times volatile, throughout the second half of 2018 and similar trend was witnessed this year. Barring a few stints of stability, the dollar showed no signs of stabilizing. The rupee-dollar exchange rates became more volatile ahead of Pakistan’s formal entry to the IMF’s loan program as the greenback rose sharply before falling back. The IMF requires, among other things, the government to leave the rates to market forces of demand and supply. This means the central bank would not fix the rate to keep the rupee artificially inflated, something it did in the tenure of former finance minister Ishaq Dar.

Both traders and end users have been closely monitoring dollar rates since the present government’s started its term in August 2018. The dollar was trading at Rs124 when the PTI government was sworn in, but rose by more than 25% to its current value since then.

As Pakistan formally enters the IMF program, the policy of market-driven exchange rates will remain in place. The State Bank of Pakistan will neither fix the exchange rate nor completely leave it to market forces, Dr Reza Baqir, the SBP governor, said in an earlier press conference. “We will keep a close eye on its movement and intervene to avoid any speculative movement and volatility,” he said. Dr Baqir termed the regime to be ‘market-based exchange rate system’.

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