The significant rise in the value of the Pakistani Rupee (PKR) against the US dollar (USD) in the past weeks has emerged as a surprising development in the money market.

On Thursday the US dollar depreciated further on the Interbank Foreign Exchange (IFEX), in the open market, the dollar fell by 20 paise to 156 rupees. Whereas, at the Interbank Foreign Exchange (IFEX), the dollar traded down another 29 paise at Rs 155.45.

The rise in Pakistan's remittances and exports and the accumulation of dollars in the SBP Roshan Digital Accounts are among the factors behind the rupee appreciation against the dollar. However, economist Mazammil Aslam says that the implementation of a free-float exchange rate has played a major role in this development.

“The free-float exchange rate implemented by the State Bank of Pakistan (SBP) is the biggest reason behind the decline in US dollar value,” said economist Muzammil Aslam, while talking to local media. Aslam said that under the free-float system the value of the dollar is directly related to its demand in the market.

He said that the previous governments used to keep the dollar artificially stable and the SBP used to sell its reserves. “However, this time around the SBP has purchased dollars from the market, still USD has declined to Rs 155, has the central bank not buy dollars, the USD may have dropped to Rs 150,” he said.

Since last year August, the US dollar has depreciated by Rs 12.95, or a drop of 8 percent against PKR. The US dollar hit a record high of Rs 168.40 in August.