Noida, Oct 12 (APAC Media): The Indian rupee strengthened by 91 paise to trade at ₹95.80 against the US dollar in early Monday trade, following steps taken by the Reserve Bank of India (RBI) to support the currency and contain volatility in the foreign exchange market.
The rupee opened stronger at ₹95.61 against the US dollar in the interbank foreign exchange market before trimming some of its gains to trade at ₹95.80, according to market reports.
The recovery followed a series of measures announced by the RBI aimed at easing pressure on the rupee, managing dollar demand and curbing speculative activity in the foreign exchange market.
Under the new measures, the central bank introduced a dedicated mechanism to facilitate dollar supplies to oil marketing companies through designated banks. The move is expected to reduce their direct dependence on the spot foreign exchange market and help ease demand for the US currency.
The RBI also tightened regulations governing foreign exchange derivative transactions. It barred the rebooking of cancelled rupee-linked derivative contracts and reduced the threshold for certain transactions without underlying exposure from $100 million to $5 million.
In another step, the central bank introduced a Foreign Exchange Risk Reserve requirement for eligible transactions, requiring authorised dealers to maintain additional cash reserves against specified derivative exposures.
The measures are aimed at strengthening market discipline and reducing excessive volatility in the rupee, market participants said.
However, the domestic currency continues to face pressure from global economic uncertainties, elevated crude oil prices and persistent demand for the US dollar.
India’s dependence on crude oil imports makes the rupee particularly vulnerable to rising international oil prices, which increase the country’s dollar requirements and can put pressure on the trade balance.
Market participants will closely monitor movements in crude oil prices, foreign capital flows and the strength of the US dollar to assess whether the rupee can sustain its recovery.
The RBI’s intervention has provided near-term support to the domestic currency, but the sustainability of the gains will depend on broader market conditions and the effectiveness of the measures in reducing dollar demand.
There was no immediate official statement available on the extent of the rupee’s recovery beyond the reported early-trade movement.
-ENDS–
Disclaimer: This article is for informational purposes only and is based on publicly available information. APAC Media is not responsible for investment decisions or losses. Please conduct your own research or consult a financial adviser before investing.
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