Mumbai: The Indian rupee recovered from its record low level and ended 45 paise higher at 91.60 against the US dollar on Thursday. The currency gained support from a strong recovery in domestic equity markets and reports that the Reserve Bank of India (RBI) intervened to stabilise the rupee.
Forex analysts said the central bank likely stepped in to prevent extreme volatility in the currency market amid global uncertainties.
Trading Range During The Day
At the interbank foreign exchange market, the rupee opened weaker at 92.16 against the dollar. During the day, the currency touched an intraday high of 91.30 before closing at 91.60 (provisional).
The recovery came a day after the rupee had fallen sharply. On Wednesday, the currency had closed at its all-time low of 92.05 against the dollar, after losing 56 paise in a single session. The forex market remained closed on Tuesday due to the Holi holiday.
RBI Intervention And Market Sentiment
According to Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, the rupee bounced back mainly due to reports of RBI intervention and a positive trend in domestic stock markets.
However, the gains were limited because of the strengthening US dollar and rising global crude oil prices. Choudhary said continued foreign institutional investor (FII) outflows may also keep pressure on the rupee in the near term.
He added that the USD-INR spot rate is expected to trade between Rs 91.30 and Rs 92.10 in the short term. Traders may also watch key global indicators such as US weekly unemployment claims data.
Global Factors Continue To Influence Currency
Globally, the dollar index, which measures the strength of the US dollar against six major currencies, was trading 0.13 percent higher at 98.86.
Meanwhile, Brent crude oil prices rose 1.83 percent to USD 82.89 per barrel, driven by rising geopolitical tensions in the Middle East.
The ongoing conflict involving the US, Israel and Iran has increased fears of disruptions in crude oil supply, particularly through the Strait of Hormuz, an important global oil shipping route.
Impact On India And Market Sentiment
Experts warn that rising oil prices could increase India’s import bill, as nearly 85 percent of the country’s fuel needs are met through imports.
Despite global uncertainties, the domestic stock market showed strong recovery. The Sensex surged 899.71 points to close at 80,015.90, while the Nifty rose 285.40 points to 24,765.90.
However, foreign investors remained cautious. According to exchange data, foreign institutional investors sold equities worth Rs 8,752.65 crore on Wednesday, reflecting continued pressure on the market and currency.
