Rupee Appreciates by 49 Paise to 95.28 Against Dollar on RBI Measures

 Mumbai: The Indian rupee strengthened for the third straight session on Tuesday appreciating 49 paise to close at 95.28 against the US dollar. The rupee surged sharply in the morning trades after the RBI extended its curbs on rupee based derivative contracts to hedges held by banks against its assets and liabilities by imposing a 20 per cent foreign exchange risk reserve. Traders said that banks liquidated Non Deliverable Forward (NDF) positions before opening which helped the rupee rise by 77 paise to an intra‐day high of 95.01 level compared to its previous close.

The rupee has recovered nearly 2 per cent over three days from the recent high. “The spot USD/INR has support at 95.00. While a sustained move below this threshold opens potential toward 94.50, ongoing external macroeconomic pressures are likely to temper further gains” said Dilip Parmar, senior research analyst at HDFC Securities.

At the interbank foreign exchange market, the rupee opened at 95.17 to a dollar. It touched a high of 95.01 and a low of 95.31 before closing at 95.28 compared to its previous close of 95.77 per dollar.

Meanwhile, the Finance Minister Nirmala Sitharaman at an event 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 FM further said that the rupee has reached a low against the US dollar, and the RBI is taking efforts through its regulatory powers to ensure the domestic currency stays stable. Sitharaman said the latest measures by the RBI supported the rupee as its value surged one per cent on Monday.

The Reserve Bank of India (RBI) on Saturday fired a bazooka of measures to stabilise the currency, including a dedicated dollar window for state-run oil companies and tighter rules on foreign-exchange derivatives. These steps are reducing immediate spot-market dollar demand and discouraging speculative positions, while likely RBI dollar sales have provided additional support. The rupee also benefited from some moderation in crude prices, although elevated oil costs and persistent foreign portfolio outflows remain risks.