The rupee rose sharply against the US dollar in the open market on Thursday, gaining Rs13 to close at Rs298, according to the Forex Association of Pakistan.

Analysts said the rise in the value of the rupee in the open market came after the State Bank of Pakistan (SBP) allowed banks to acquire US dollars from the interbank market for the settlement of card-based cross-border transactions with the International Payment System.

The SBP issued a circular on Wednesday, which indicates that this is a short-term move as the permission granted to banks will end on July 31.

Prior to today’s movement, the open market dollar rate was higher by around Rs30 compared to the interbank market, where the greenback had closed at Rs285.47 yesterday.

“The SBP made the right decision at the right time. It will bring down the open market dollar rate by up to Rs20-25. It will also help to narrow the huge gap between the interbank and the open market,” Zafar Paracha, General Secretary of Exchange Companies Association of Pakistan, had said yesterday.

Paracha said a large chunk of the business exchange companies are currently receiving was coming from banks, who have been buying dollars from them for several years.

With the latest SBP decision, this demand (from banks) for the greenback in the open market has vanished, which is why there is a sharp drop being witnessed in its price.