Rupee rallies 82 paise to 94.96 against US dollar on RBI measures

New Delhi: The Indian rupee strengthened by 82 paise to 94.96 against the US dollar in early trade on Tuesday, supported by a series of measures announced by the Reserve Bank of India (RBI) to ease immediate dollar demand and curb excessive speculative positions in the foreign exchange market.

Follow The PSUWatch Channel on Whatsapp

Forex market participants said the RBI’s steps, including a dedicated dollar window for oil marketing companies through designated banks and higher costs for certain foreign exchange hedging transactions, could help reduce demand for dollars in the spot market and discourage speculative bets against the domestic currency.

At the interbank foreign exchange market, the rupee opened at 95.53 against the US dollar before strengthening to 94.96, marking a gain of 82 paise over its previous closing level.

The domestic currency had gained 93 paise on Monday to close at 95.78 against the dollar, recording its steepest single-day appreciation in more than six months.

“With the RBI’s measures supporting the rupee, we expect USD/INR to move towards the 95.00–94.80 range in the near term,” said Amit Pabari, managing director of CR Forex Advisors.

The RBI announced a series of measures on Saturday to stabilise the foreign exchange market and discourage speculative activity. It tightened rules governing foreign exchange derivative transactions and directed banks to maintain a 20 percent reserve requirement for dollar purchases exceeding USD 2 million.

In a separate move aimed at curbing speculative activity in the derivatives market, the central bank instructed authorised dealers not to permit users to rebook any cancelled foreign exchange derivative contract involving the Indian rupee, whether deliverable or non-deliverable.

Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six major currencies, declined 0.15 percent to 102.43, providing additional support to the Indian currency.

Brent crude, the global oil benchmark, fell 1.11 percent to USD 105.47 per barrel in futures trade. Lower crude prices could offer some relief to India’s import bill and reduce pressure on the rupee, given the country’s dependence on imported oil.

In the domestic equity market, benchmark indices also traded higher in early deals. The BSE Sensex climbed 305 points to 72,224.15, while the NSE Nifty advanced 93.40 points to 22,458.50.

However, foreign fund outflows continued to weigh on investor sentiment. Foreign Institutional Investors (FIIs) sold equities worth Rs 1,708.48 crore on a net basis on Monday, according to exchange data.

On the macroeconomic front, India’s retail inflation accelerated to 5.54 percent in September, driven by higher onion and other food prices, according to government data released on Monday. Inflation remained within the RBI’s prescribed tolerance band of 2–6 percent.

Follow PSU Watch on LinkedIN

The Consumer Price Index (CPI)-based headline inflation had stood at 4.83 percent in August, as per data from the National Statistical Office (NSO).

Market participants will continue to monitor the effectiveness of the RBI’s measures, movements in the dollar index and crude oil prices, foreign investment flows, and domestic inflation trends for further cues on the rupee’s direction.

(PSU Watch is India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy. 👉 Click to join our channel now: PSUWatch WhatsApp Channel. Prefer LinkedIn? Follow PSU Watch on LinkedIN. Click to stay connected on Twitter here and stay updated.)