The rate of the US dollar increased by Rs1.20 in the open market on Monday. 

Sources said the dollar was trading at Rs113.50 in the open market.

The State Bank of Pakistan recently moved to allow the currency exchange rate to adjust to market conditions, after being stable for the first four years of the government. 

The central bank devalued the currency by about five per cent in December, and the market expects further weakening of the rupee before the general elections in mid-2018 to ease balance of payments pressure stemming from a widening trade deficit and growing fiscal deficit.

Finance adviser Miftah Ismail targets tax reforms, touts rupee flexibility

Ismail wants tax reforms to focus on widening the tax base, simplifying tax structures, and slashing personal tax rates to encourage more people to file returns

In an interview to Reuters published on December 30, newly-appointed finance adviser Miftah Ismail said there was a policy of greater flexibility for the currency and he would not be hostile to it either weakening or firming

On December 12, the rate of the US dollar broke its last highest record as it reached Rs111 in the interbank market.

According to forex dealers, the dollar rate increased by Rs2.75 in the interbank market that day, crossing its peak of Rs110.50 in September 25, 2013.

Economist Mohammad Sohail had told Geo News that the reason behind the increase is the country's high import bill, adding that the former finance minister had unnaturally restricted the rate at Rs105.50. 

Meanwhile, on Monday, the Pakistan Stock Exchange saw an increase in trading. The KSE 100-index increased by 480 points to reach the 48,000 points mark.