As per the State Bank of Pakistan (SBP), the rupee closed at 177.41 after a day-on-day appreciation of 6 paisas or 0.03%. The local currency has been on a negative trajectory for the past three sessions, dropping a cumulative 0.74% since Thursday last week.

The marginal gain comes a day after Prime Minister Imran Khan, in a move to appease the masses amid high political noise, announced to reduce petroleum products’ prices by Rs10 per litre and electricity tariff by Rs5 per unit and other measures.

In a televised address to the nation on Monday, the PM said the decision comes despite the regulator's summary to increase oil prices.

Following the development, Khan also announced an industrial package on Tuesday.

“The relief measures alongside an industrial package has created a positive sentiment in the market,” Samiullah Tariq, Head of Research at Pakistan Kuwait Investment Company, told Business Recorder.

On concerns over relief measures creating pressure on the fiscal front, Tariq said that “the government already has a funding plan as announced by Finance Minister Shaukat Tarin earlier, therefore it will not be much of an issue”.

However, Fahad Rauf, Head of Research at Ismail Iqbal Securities Limited, expressed concern over the International Monetary Fund's (IMF) willingness to come on-board with the new measures announced by the government.

"On the assumption that the IMF does not give its approval, it is possible that the package announced could be reverted, like earlier," added Rauf.

He said that giving subsidies is always a negative development for a deficit economy, "as with rising oil prices, the quantum of subsidy given would widen.

"If the the impact of rising cost is not passed, it will lead to a revenue loss."