KARACHI: The Pakistani rupee on Friday strengthened 3.5% versus the U.S. dollar in the interbank market, a day after the central bank raised its policy interest rate by 300 basis points (bps) to 20%, trading data showed.
The rupee, which fell more than 6% on Thursday, was trading at 275.5 against the dollar, up nearly 3.5%, after the opening session.
The value of the local currency has been depreciating amid delays in a funding deal with the International Monetary Fund (IMF), which is crucial for the South Asian's broken economy faced with a balance-of-payment crisis.
The sides have been negotiating a policy framework since the start of last month to agree on measures to bridge the fiscal deficit ahead of an annual budget around June.
A staff-level agreement is yet to be signed, which finance minister Ishaq Dar said on Thursday should be done by next week.
If negotiations succeed, the IMF will issue over $1 billion to Pakistan, which is critical to unlock other bilateral and multilateral funding.
A market-based currency exchange is one of several conditions the IMF has made to approve the funding.
