After falling for the past five trading sessions, the rupee on Wednesday recovered 28 paise, or 0.33%, against the dollar, marking its biggest gain in over seven months, helped by a weaker dollar and a lower-than-expected trade deficit number. Intervention from the Reserve Bank of India also helped the rupee hold its ground.
Also ReadStallion India IPO opens on January 16: Here’s all you need to know
The rupee closed at 86.3625, compared with Tuesday’s close of 86.6463, making it the best single-day percentage rise since June 3, 2024. The currency touched a high 86.3075 during intraday trade on Wednesday.
“There are some reports stating that the RBI governor is of the opinion to let demand-supply decide the course for the rupee, which means that we may see further weakness in the currency in coming months,” said Kunal Sodhani, vice president- treasury, Shinhan Bank.
According to bankers, the RBI was seen selling dollars at around 86.51 levels. The apex bank intervenes in the forex market to reduce the any sharp volatility in the rupee. Instead of targeting any specific level for the currency, the RBI focuses on lowering sharp fluctuations.
The rupee was helped by the dollar index’s retreat from a more than two-year peak. The index, which tracks the greenback’s value against six of its major peers, eased to 109.25 on Wednesday, from 109.65 in the previous trading session. The US 10-year treasury yield softened to 4.76%.
Bond yields eased amid expectations of liquidity-boosting steps by the banking regulator. The benchmark 10- year bond yield ended lower at 6.814% on Wednesday from 6.822% on Tuesday.
Also ReadHere are 4 things you need to know about RIL shares ahead of Q3 results
India’s December trade deficit came in lower than estimates at $21.94 billion, compared with the revised November number of $32.84 billion. According to a Reuters poll, December trade deficit was expected to be at $27.33 billion.
“The recovery in the rupee came as the dollar index faced profit booking over the last two days, retreating below 108.90 after failing to breach the 110 level, following a strong rally from 107 in the past two weeks,” said Jateen Trivedi, research analyst – commodity and currency, LKP Securities. “The rupee’s trading range is expected to lie between 86.20 and 86.80,
» Read More
