Oil prices, which form a substantial portion of Pakistan’s import bill, also continued to pull back, dropping more than 2% as investors recalibrated assessments of recession risks and fuel demand amid interest rate hikes in major economies.

U.S. West Texas Intermediate (WTI) crude futures had skidded $2.6, or 2.7%, to $103.46 a barrel by 0330 GMT. Brent crude futures slid $2.5, or 2.3%, to $109.22 a barrel.

All three developments contributed to the substantial gain posted by the rupee that had plunged to new lows all throughout the last two weeks.

At close on Thursday, the rupee closed at 207.23 against the US dollar, after an appreciation of 2.27% or Rs4.7, as per the State Bank of Pakistan (SBP). In absolute terms, the gain is the biggest posted by the rupee against the dollar on a day-to-day basis.

Earlier on Wednesday, Minister for Finance and Revenue Miftah Ismail announced that a Chinese consortium of banks signed an RMB 15 billion ($2.3 billion) loan facility agreement. The development was seen as a positive as it would shore up Pakistan’s dwindling foreign exchange reserves that dropped below $9 billion last week.

Chinese consortium signs $2.3bn refinancing agreement with Pakistan: Miftah

The minister, in a tweet, said the inflow was expected within a couple of days. “We thank the Chinese government for facilitating this transaction,” he added.

Meanwhile, talking to journalists, Miftah said good news from the IMF was also expected by the end of the current week.

According to sources, Pakistan and the IMF reached an understanding on the federal budget 2022-23, paving the way for the revival of the Extended Fund Facility.

“The sentiments in the market have reversed after Chinese agreement, leading to expectations of inflows in the coming days,” said Abdullah Umer, an analyst at Ismail Iqbal Securities Limited.

“The revival of the IMF programme is in the pipeline as well, which will strengthen the rupee further,” he said.

The analyst added that the market remains in speculation mode, which is reflected in the volatility on a daily basis. “As per Real Effective Exchange Rate (REER), the dollar value is around 200-205. However, with expected inflows, more people will offload their dollars, easing off pressure on the local currency,” he said.