Mumbai: The Indian rupee staged a rebound on Monday, rising 49 paise to 89.17 against the US dollar in early trade after slipping to an all-time low at the end of last week. The recovery was largely supported by US dollar selling by banks, softer global crude oil prices, and timely intervention by the Reserve Bank of India (RBI), forex traders said.
The domestic currency opened at 89.46 before strengthening to 89.17, a notable improvement from Friday’s sharp 98-paise decline, the steepest in more than three years, which had dragged the rupee to its lifetime low of 89.66. The previous biggest single-day fall was recorded on February 24, 2022, when the rupee slid 99 paise against the dollar.
Market Sentiment and Expectations
The rupee’s bounce coincided with a positive start in Indian equity markets, where the Sensex gained 218.44 points to reach 85,450.36, and the Nifty rose 69.4 points to 26,137.55. Brent crude prices also softened slightly, trading 0.10% lower at USD 62.50 per barrel in futures, providing additional support to the currency.
Currency traders remain cautiously optimistic. According to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, most participants believe the rupee may remain shielded from breaching the psychological 90-per-dollar level for the next few weeks, particularly as markets await progress on the anticipated India-US trade deal by December-end. However, he warned that without a breakthrough, the 90-mark could quickly come into play.
Meanwhile, the dollar index was marginally higher at 100.18, indicating a relatively steady global greenback. Foreign institutional investors, however, continued to exert pressure on domestic markets, offloading equities worth Rs 1,766.05 crore on Friday.
Reserves Strengthen Even as Currency Weakens
In a contrasting positive, India’s forex reserves surged by USD 5.543 billion to USD 692.576 billion for the week ended November 14, driven primarily by a jump in the value of gold reserves, the RBI reported. While robust reserves offer a cushion for the rupee, sentiment in the currency market remains volatile amid global equity weakness and persistent trade-related uncertainties.
