The Pakistani rupee gained ground against the US dollar this week in both the interbank and open markets, as authorities ramped up enforcement efforts against illegal currency trading networks and demand for the greenback declined, analysts reported Thursday.

After several weeks of consistent depreciation, the rupee showed signs of recovery. In the interbank market, the US dollar dropped from Rs284.97 to Rs284.25 over a two-day period—a modest gain of 72 paisa for the local currency. In the open market, the dollar experienced a sharper decline, falling by Rs1.30 to settle at Rs287.30 from Rs288.60 earlier.

Currency experts attributed this reversal to the government’s ongoing crackdown on informal remittance systems, particularly Hawala and Hundi channels, which often bypass regulated banking systems and fuel speculative dollar hoarding.

Malik Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP), told SAMAA TV that efforts to curb illegal currency exchange practices are already producing visible results. “The crackdown is working. Illegal operators are being squeezed out, and the market is stabilizing,” he said.

Bostan further noted that the State Bank of Pakistan (SBP) has paused its dollar purchases from the interbank market, easing pressure on the rupee and improving dollar availability. “There is no shortage of dollars. People should stop hoarding and start selling,” he urged, emphasizing the importance of public trust in market stability.

Following a meeting with a senior official in Islamabad on July 22, Bostan expressed optimism that the rupee could continue appreciating if the current trends hold.

Traders also reported an uptick in remittance inflows following Eid, which has added to dollar liquidity in the market. “We’ve noticed more people coming in to sell dollars after the government’s action against illegal exchanges,” said a Karachi-based currency dealer. “This is helping restore balance.”

Positive sentiment extended beyond currency markets. The Pakistan Stock Exchange (PSX) showed resilience, with the benchmark KSE-100 Index trading above 139,800 points midweek. Analysts attributed this momentum to improving investor confidence in economic reforms and ongoing administrative measures aimed at market stabilization.

With authorities signaling sustained efforts against unregulated currency flows and the SBP taking a more neutral stance in dollar buying, the rupee’s short-term outlook appears more stable than in recent weeks.