Rupee Rallies as Forex Inflows Surge; Currency Climbs Amid Lower Oil Prices
The Indian rupee strengthened on Tuesday, climbing by 21 paise to close at 96.24 against the US dollar. This recovery was supported by continued steady foreign currency inflows and tempering demand for the dollar due to lower oil prices.The stability was further reinforced by revelations from the Reserve Bank of India (RBI) concerning dedicated programs aimed at drawing durable forex inflows. These focused initiatives have reportedly garnered nearly $21 billion, bolstering investor sentiment toward the domestic currency.
Forex Inflows Drive Rupee Strength
The movement in the rupee reflected a shift in market focus away from commodity-driven dollar demand. Lower global oil prices played a pivotal role by reducing the need for significant USD purchasing among oil companies. This reduced pressure helped fuel the consistent support seen throughout the day.Before domestic markets opened, the currency was trading in a tight range of 96.50 to 96.55 per dollar. However, the market saw active intervention that influenced the morning trade.
Institutional Intervention and Trading Dynamics
The currency's session on Tuesday featured significant institutional activity. State-run banks, likely operating on instructions from the central bank, were observed selling dollars during the first half of the day. This action provided crucial support to the rupee.These sales acted as a stabilizing force, particularly around the 96.42 level. The currency traded within the range of 96.42 and 96.12 throughout Tuesday’s session. Earlier, Finrex Treasury Advisors noted that the local unit had ended the previous day (Monday) at 96.45 per dollar.
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