The US dollar came down more than Rs3 against the local currency within 20 minutes, in a surprise development on Friday.

The dollar remained at this level until suspending banking activities, owing to a more strict lockdown for Friday prayers.

“The dollar may further retreat to the Rs160 level today or first thing next week,” said Forex Association of Pakistan president Malik Bostan. “The finance ministry has estimated its dollar outlook at Rs160 for the next fiscal year expenditure which was less than the current valuation.”

He added that this forecast is unusual, as their forecasts are typically higher than the actual exchange rates. “The government knows the dollar will come down below the Rs160 level soon.”

Thursday’s emergency interest rate cut was expected to encourage foreign investors to sell their shares and buy dollars but that didn’t happen, said Zafar Paracha, general secretary for Pakistan’s Exchange Companies Association.

“The IMF support package prospects and the deferment of the repayment schedule has stabilized Pakistan’s economic outlook,” he added.

Bostan said the usury market is attractive for foreign investors given the rate cut, as interest rates were still competitive, and with the recovery of the local currency, investors would be able to buy more dollars as their securities mature.