Rupee soars to 2-month high against Dollar: What's the reason?
What's the story
The Indian rupee has strengthened to a nearly two-month high, gaining 40p to trade at 87.68 against the US dollar in early trade today. The rise is attributed to a mix of central bank intervention, a weaker dollar index, and favorable domestic and global factors. The rupee opened at 87.76 on the interbank foreign exchange market before quickly gaining ground to touch 87.68, marking a major recovery from its previous close.
Central bank intervention
RBI's intervention curbed speculative trades
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said the Reserve Bank of India (RBI) played a major role in the rupee's recovery. "RBI ensured that the rupee opened higher, curbing speculative trades and preventing the currency from slipping past 88.39 on Wednesday," he said. The central bank's actions have been instrumental in stabilizing the Indian currency against its US counterpart.
Market support
Positive domestic equities and foreign fund inflows boost rupee
The rupee's rise is also supported by positive domestic equities and renewed foreign fund inflows. The Sensex rose 407.67 points to 83,013.10, while the Nifty gained 104 points to 25,427.55 in early trade today. Foreign Institutional Investors (FIIs) were net buyers, acquiring equities worth ₹68.64 crore yesterday. These market movements have contributed to the strengthening of the Indian currency against the dollar.
Global impact
Global factors impact rupee's performance
The rupee's strength is also influenced by global market movements. The dollar index, which measures the greenback's strength against a basket of currencies, fell 0.28% to 98.51. However, Brent crude futures rose 0.74% to $62.37 per barrel.