New Delhi — The Indian rupee strengthened by 32 paise against the U.S. dollar in early trading Thursday, supported by regulatory measures from the Reserve Bank of India (RBI), declining crude oil prices and a weaker dollar.
The rupee rose to 94.85 per dollar after opening at 94.91, extending its recent gains as traders responded to tighter foreign exchange regulations and improving market conditions.
The currency had closed the previous session at 95.16 against the dollar, gaining 19 paise.
The rupee’s recent appreciation has been supported by the RBI’s intervention in the foreign exchange market, measures to tighten liquidity and the unwinding of positions by traders who had previously bet on a stronger dollar.
Earlier in October, the central bank introduced stricter regulations governing foreign exchange derivatives to limit speculative activity against the rupee.
Among the measures, the RBI directed banks to maintain a 20% reserve against dollar purchases exceeding $2 million.
The central bank also imposed restrictions on foreign exchange derivative contracts involving the rupee, instructing authorized dealers not to allow customers to rebook canceled contracts, whether settled through physical delivery or cash payments.
Currency analysts said the rupee had moved beyond its previous trading range of 95.00 to 95.50 per dollar, with 94.80 emerging as the next significant level.
A sustained move past that level could allow further appreciation, particularly if demand for dollars from oil marketing companies remains subdued and investor sentiment continues to improve.
Lower crude oil prices also provided support. Brent crude, the international oil benchmark, fell nearly 2% to $104.30 per barrel, easing concerns about India’s energy import costs and demand for foreign currency.
The U.S. dollar index, which tracks the dollar against a basket of major global currencies, declined to 101.99, adding to the rupee’s strength.
Indian stock markets also advanced during the session, reflecting broader optimism among investors.
The benchmark Sensex climbed more than 1,000 points, or 1.45%, to 73,836.71, while the Nifty gained approximately 300 points, or 1.36%, to trade at 22,929.55.
Despite the rupee’s recent recovery, currency analysts expect continued volatility through the remainder of the year.
Market projections place the rupee in a range of 95.60 to 97.50 against the dollar by the end of 2026, with most estimates concentrated between 96 and 97 per dollar.
The outlook suggests that while regulatory intervention, lower oil prices and improving investor confidence have provided near-term support, the currency’s longer-term performance will remain sensitive to global economic conditions and demand for the U.S. dollar. (Source: IANS)
