The rupee ended its two-day depreciation run against the US dollar, dropping below the 207 level at close on Tuesday, as Pakistan and the International Monetary Fund (IMF) inched closer to reviving the bailout programme.

As per the State Bank of Pakistan (SBP), the rupee closed with a gain of Rs1.07 or 0.52% to close at Rs206.87 against the greenback.

On Monday, the rupee had fallen by 46 paisas or 0.22% to close at Rs207.94 against the US dollar.

In an early morning development, Pakistan received combined economic and financial targets for the seventh and eighth reviews of its IMF bailout programme, said Finance Minister Miftah Ismail.

Inching closer: Pakistan receives combined IMF targets for 7th, 8th reviews

On Twitter, Miftah said the government had received the lender’s Memorandum of Economic and Financial Policies (MEFP) for both reviews, following meetings last week between the two sides.

The government wants to conclude an agreement with the monetary watchdog for the revival of the $6 billion program before the approval of the Federal Budget 2022-23. It needs to get the budget approved by June 28.

The IMF programme is widely seen as crucial for Pakistan’s economy, which has struggled with high inflation and a widening current account deficit. The deterioration has caused the rupee to hit all-time lows several times during the year, with over 15% depreciation this calendar year alone.

“The appreciation comes amid two to three positive developments, including development on the IMF front, inflows to the tune of $2.3 billion from China, and a slowdown in global commodity prices,” Saad Khan, Head of Research at IGI Securities Limited, told Business Recorder.

Rupee should appreciate close to 200 in the short run following these developments, said Khan.

“However, current account deficit figures are expected to be on the higher side, owing to slowdown in remittances and outflow of dollars due to repatriation of profits from companies,” he said, adding that the CAD figure may hit $1.2 billion.

However, things would normalise in the coming months, he added.