The rupee appreciated by Rs1.02 or 0.37% against the dollar in the interbank market on Thursday, the central bank said. This comes a day after Pakistan’s stand-by arrangement with the International Monetary Fund was formally approved by the money lender’s board.

The dollar fell to Rs275 during Thursday’s trading before closing at Rs276.46. The local currency has been taking an upward trajectory since the government reached a staff-level agreement on a $3 billion stand-by arrangement.

The dollar fell by Re1 to close at Rs281 in the open market, according to traders. It touched a low of Rs279 during the trading.

As predicted by economic experts, the development has shown a positive impact on Pakistan’s economy. Over the past few days, the country received inflows from two friendly countries and the shares saw a massive increase in the share market.

The first tranche of $1.2 billion from the IMF was deposited in the central bank on Thursday, Finance Minister Ishaq Dar said in a televised address.

Pakistan managed to sign an IMF deal after months of back-and-forth negotiations on June 30, which was formally approved on Wednesday. Faced with depleting foreign exchange reserves leading to a weakening currency and increased inflation, Pakistan was desperately in need of a cash boost from the Fund.

Along with the IMF approval, dollar deposits worth a total of $3 billion have also been received from Saudi Arabia and UAE.

On July 10, a global rating agency upgraded Pakistan’s long-term foreign currency issuer default rating (IDR) to ‘CCC’ from ‘CCC-’ because of improved external liquidity and funding conditions.

The rating agency, Fitch, noted that Pakistan took measures to address shortfalls in government revenue collection, energy subsidies and policies inconsistent with a market-determined exchange rate, including import financing restrictions. These issues held up the last three reviews of Pakistan’s previous IMF programme, before its expiry in June.

Though the agency was hopeful that the SLA would be approved by the international lender, it was of the view that “programme implementation and external funding risks remain due to a volatile political climate and large external financing requirement.”