KARACHI: Pakistan’s national currency on Thursday closed at Rs239.71, just shy of the all-time low of Rs239.94, against the US dollar in the interbank market as the news of more foreign funding slowed the pace of depreciation, said analysts and traders.

The Pakistani rupee, which hit the historic low against the greenback on July 28, closed 0.03 percent lower in the interbank market amid continued pressure for imports, according to the central bank.

“The rupee is expected to stabilize from these levels in the coming days due to the news of further financing coming from the World Bank and the Asian Development Bank,” Samiullah Tariq, director research at the Pakistan-Kuwait Investment Company, said.

“Further depreciation of rupee was also partly halted due to the availability of dollar in the market which means the supply of cash is being restored,” he added.

However, the currency appreciated from Rs245.40 to Rs244.90 in the open market as dealers limited the trading under the self-imposed capping mechanism, according to the Exchange Companies Association of Pakistan (ECAP).

“The gap between interbank and open market had widened and we voluntarily decided to impose a cap to restrict the flow of dollar in the national interest,” Zafar Paracha, ECAP general secretary, told Arab News.

“We have decided not to sell dollar above Rs245 and buy above Rs243 which has resulted in the appreciation of rupee in the market,” he added. “In addition, the central bank’s vigilant move against commercial banks has also reduced volatility in the currency market.”

Pakistani analysts and dealers expect that the World Bank will provide financing of about $850 million to deal with the devastating floods while pointing out it will have a positive impact on the currency market.

Even as the amount was not mentioned by the global lender on Thursday, it assured Pakistan of immediate financing for social sector support and rebuilding of infrastructure destroyed by the recent floods.

“President Malpass affirmed to Prime Minister [Shehbaz] Sharif the World Bank Group’s (WBG) commitment to support Pakistan with immediate financing by repurposing the existing loan portfolio and through new emergency investment operations,” said a statement issued by the bank after its president met with the Pakistani premier in New York.

“This WBG financing would support social protection of those most affected by flooding and would help to rebuild infrastructure damaged by the floods, including roads, dams, houses, schools, and health centers,” it added.

Pakistan’s equity market also witnessed a depressed trading session on Thursday, with benchmark KSE100 index closing 37.6 points lower at 40,927.95 level.

“Stocks closed lower on falling global equities and investor concerns for political unrest,” Ahsan Mehanti, CEO of Arif Habib Corporation, said. “Weak rupee and [the Asian Development Bank’s] cut on growth forecast to 3.5 percent for FY23 played a catalyst role in the bearish close.”