Mumbai: The rupee appreciated 19 paise to close at 95.17 against the US dollar Wednesday, registering the fourth straight session of gain, supported by Reserve Bank of India interventions designed to ease near-term dollar demand and limit speculative foreign exchange exposure.
Forex traders said the Indian rupee rose to a one-month high on RBI’s measures to curb speculative bets. A weak dollar and easing of US Treasury yields also aided the rupee. However, weak domestic markets capped sharp gains.
At the interbank foreign exchange market, the rupee opened at 95.05 against the US dollar and touched the intraday low of 94.76 against the greenback.
At the end of the trading session Wednesday, the rupee was quoted at 95.17, registering a gain of 19 paise from its previous close.
Tuesday, the rupee strengthened for the third straight session and appreciated 42 paise to close at 95.36 against the US dollar.
In the last four trading sessions, the rupee has gained 171 paise against the American currency.
We expect the rupee to trade with a positive bias on RBI’s intervention to curb excessive speculation in the rupee. A weak dollar and a decline in US Treasury yields may also support the rupee.
However, elevated crude oil prices and FII outflows may cap sharp upside. Uncertainty over a deal between the US and Iran may also weigh on the rupee. Moreover, geopolitical tensions continue to simmer in the Middle East, said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.
Meanwhile, government data released Wednesday showed India’s wholesale price-based inflation rose to 11.39 per cent in September, compared to 9.92 per cent in August, on rising prices of food, manufactured items, and fuel and power.
Finance Minister Nirmala Sitharaman Tuesday said the rupee has depreciated significantly over the past year and a half, and the RBI will continue its efforts to prevent excessive volatility in the domestic currency.
The Reserve Bank October 10 announced a slew of measures to stem rupee fall.
The central bank announced the creation of a special window for oil marketing companies, which will take the dollar demand away from the spot market and tightened rules governing forex derivatives trades to curb speculative bets against the rupee.
It also asked banks to maintain a 20 per cent reserve for dollar purchases of over USD 2 million.
Sitharaman said most of the rupee’s volatility is stemming from external challenges, while the government is ensuring that macroeconomic fundamentals remain sound within the country.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.05 per cent at 102.23.
Brent crude, the global oil benchmark, was trading higher by 0.64 per cent at USD 106.37 per barrel in futures trade.
On the domestic equity market front, Sensex declined 251.89 points to settle at 72,781.89, while the Nifty was down 99.25 points to 22,622.70.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 1,857.44 crore on a net basis Wednesday, according to exchange data.
