New Delhi, Aug 15 (IANS): The Pakistani rupee (PKR) witnessed a significant drop on Tuesday -- the first day of the caretaker government taking over the reins of power in the centre -- and closed at a three-month low of 292 PKR against the US dollar.

The local currency shed 3 PKR against the greenback in the interbank market around midday, reports The Express Tribune.

The drop was exactly in line with the market speculation that the domestic currency would face a fresh round of depreciation.

Earlier, the currency remained stable at around Rs288 against the greenback during in the past three months, reports The Express Tribune.

Speculations had been rampant that the currency was set to depreciate under the International Monetary Fund's (IMF) latest $3 billion loan program acquired in late June.

The former PDM coalition government, however, did not carry through with the depreciation during the last two months of its rule to save political capital and left the task to the caretaker setup.

The market talk further suggests that the rupee was determined to lose ground in the wake of the government's decision to remove all restrictions on imports which were earlier controlled to manage the country's dwindling foreign exchange reserves, The Express Tribune reported.

Despite a brief surge in the PKR’s value against the US dollar following the IMF deal and capital inflows from friendly countries, the currency has weakened again, reverting to pre-deal levels of between 285 PKR and 290 PKR per dollar.

This decline occurred even as the State Bankof Pakistan’s foreign exchange reserves doubled within a month, indicating that these factors alone were insufficient to strengthen the rupee.

The easing of import restrictions has increased the demand for the dollar, likely putting pressure on the local currency.