Mumbai: The Indian rupee strengthened sharply on Friday, rising 81 paise to close at 94.93 against the US dollar. The rally came after the Reserve Bank of India (RBI) announced several measures aimed at attracting foreign capital and improving foreign exchange liquidity.
The domestic currency opened at 95.72 in the interbank forex market and touched an intraday high of 94.89 before settling at 94.93. On Thursday, the rupee had closed at 95.74.
RBI Steps Boost Investor Confidence
Market participants welcomed the RBI's policy announcements, which were designed to strengthen capital inflows and support the currency.
The central bank kept the repo rate unchanged at 5.25 percent and maintained a neutral policy stance. At the same time, it introduced measures to improve dollar availability and encourage foreign investment in Indian financial markets.
Among the key steps were the expansion of the Fully Accessible Route (FAR) for government securities, easing of foreign portfolio investor limits, support for FCNR(B) deposits, and a special swap window for public sector companies raising overseas loans.
The government also announced tax exemptions on foreign investments in government securities, making Indian bonds more attractive to global investors.
Strong Forex Reserves Offer Cushion
RBI Governor Sanjay Malhotra said India's foreign exchange reserves stood at $682.3 billion, enough to cover around 11 months of imports.
Analysts believe the combination of strong reserves and new policy measures could help the rupee remain stable despite global uncertainties.
Experts said the currency may strengthen further towards the 94-94.5 range if crude oil prices remain below $100 per barrel and foreign inflows increase.
Global Factors Still Being Watched
The US dollar index was trading lower at 99.22, while Brent crude futures were near $94.75 per barrel.
Meanwhile, domestic equity markets ended lower, with the Sensex falling 116.67 points and the Nifty losing 49.85 points. Foreign investors remained net sellers, withdrawing Rs 4,447 crore from equities on Thursday.
The RBI also revised its FY27 GDP growth forecast down to 6.6 percent and raised its inflation estimate to 5.1 percent, reflecting concerns over rising energy prices and global uncertainties.
