The Indian rupee extended its gains for a fourth consecutive session, supported by the intervention by the Reserve Bank of India and dollar inflows, according to currency traders. The currency rose 22 paise to 94.95 against the dollar on Tuesday, the highest level in two months.
The rupee rose above the 95 level in nearly two months. Following this, the Indian rupee was the best-performing Asian currency on Tuesday. Over the past week, the rupee gained 0.8%. In the calendar year so far, the rupee declined 5.65%.
“The RBI sold dollars early in the session around the 95.15 level, pushing the rupee down to its opening near 95.00, after which some dollar inflows supported the currency,” said Anil Kumar Bhansali, head of treasury, Finrex Treasury Advisors LLP.
The RBI has remained active in selling dollars over the past few weeks to keep the rupee within a range.
It appears the RBI is trying to keep the rupee either range-bound or even allow modest appreciation, leveraging its ample dollar liquidity to actively manage the currency, Bhansali added. “94.90 and 94.75 are crucial levels; a break could open the door to 94.20–94.30, with the broader trading band still seen around 94–96.5 in the near-term.”
The rupee strengthened despite a rise in oil prices, which climbed 1.85% to $92.16 per barrel on Tuesday amid fresh geopolitical developments. US President Donald Trump on Monday issued a fresh warning against Iran and threatened to hit hard. This follows US airstrikes on the country and retaliatory attacks by Tehran.
“The positive growth outlook is helping offset pressure from higher oil prices and keeping sentiment towards the rupee stable. Going ahead, crude, dollar movement and FII flows will remain key triggers,” said Jateen Trivedi, research analyst – commodity and currency, LKP Securities.
