Rupee Touches 7-Month-High But Closes Weaker on RBI's Dollar Buying

“With no flows really seen it looks like more of a long cutting and to show the United States that we are not a currency manipulator. Also, possibly we may be getting ready for a conflict on the western border so that when the rupee weakens, the run up is not beyond 88 levels. The range for Monday is expected to be between 84 to 85 levels with the market awaiting for the Non-Farm Payrolls data today which will give an indication on the US labour market,” said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors LLP.

The rupee breached the psychologically crucial 84-per-dollar mark for the first time since October 17 2024. It eventually settled at 84.51 per dollar, marginally weaker than the previous close of 84.49. According to reports, the central bank may have intervened to the tune of $3 billion. The dollar index was down 0.3 per cent at 99.8 on Friday. It measures the strength of the greenback against a basket of six major currencies.

The rupee's sharp rally over the last two months has pulled it up by over 3 per cent, helping it wipe out most of its losses since Donald Trump's victory in the US elections - and ensuing policy changes, hurt risk assets across the board. But the currency's sharp moves have also pushed up the rupee's one-month realised volatility, which has risen to an over two-year peak of 5.1 per cent.

India's forex reserves increased $1.983 billion to $688.129 billion during the week ended April 25, the RBI said on Friday. This is the eighth consecutive week of a rise in the kitty, which had jumped $8.31 billion to $686.145 in the previous reporting week.