Pakistan's rupee continued to recover against the US dollar, closing below the 170 level for the first time in over a month in the inter-bank market on Wednesday.

As per the State Bank of Pakistan (SBP), the PKR settled at 169.97 against the USD after a day-on-day appreciation of Rs0.57 or 0.34%. This is the sixth successive session the rupee has gained against the US dollar in the inter-bank market.

On October 26, the PKR had dropped to its lowest level, closing over the 175 level for the first time.

Interbank closing #ExchangeRate for today:https://t.co/lDGnjYLTkF pic.twitter.com/9Z6ozl8Ukp

— SBP (@StateBank_Pak) November 3, 2021

However, since then, the rupee has gained 3.12% on the back of Saudi Arabia's support package, and positive news flow on the International Monetary Fund (IMF) programme.

PKR last closed below the 170 level against USD on September 28.

"The rupee has continued to show strong momentum during the week on account of a number of positive developments – both in economic and political spheres – that have created a positive sentiment in the market," Saad Khan, Head of Equities at IGI Securities, told Business Recorder.

Saudi Arabia announced a $4.2-billion support package for Pakistan, which has had a positive impact on the PKR/USD parity, added the analyst.

Last week, the Saudi Fund for Development (SFD) announced the issuance of the Royal Directive to deposit an amount worth of $3 billion into the central bank of Pakistan. Additionally, the SFD said that the royal directive was also issued to finance the oil derivatives trade with a total amount of $1.2 billion throughout the year.

Furthermore, improved trade figures also created a positive sentiment in the market, Khan added.

Pakistan’s trade deficit on a month-on-month basis narrowed by 7.14% to $3.886 billion in October 2021, compared to $4.185 billion in September 2021, said the Pakistan Bureau of Statistics (PBS) on Tuesday.

The country’s exports registered 1.58% growth on a month-on-month basis and stood at $2.448 billion in October 2021, compared to $2.410 billion in September 2021, whereas imports declined by 3.96% in October 2021 and stood at $6.334 billion, compared to $6.595 billion in September 2021.

He added that the statements given by Advisor to Prime Minister on Finance and Revenue Shaukat Tarin regarding the International Monetary Fund (IMF) have also brought some respite to the market.

Days ago, Tarin said that that agreement with the IMF, under which $1-billion will be released by the international lender, will be announced in a day or two.

Furthermore, Khan said that the government's successful negotiations with Tehreek-e-Labbaik Pakistan (TLP) have also bought much-needed political stability.

He added that the PKR is expected to appreciate further by Rs1-2 in the coming days.