New Delhi: The Indian rupee strengthened in early trade on Thursday. The rupee rose by 32 paise to 94.85 against the US dollar. The Reserve Bank of India’s (RBI) foreign exchange market measures, a weak dollar, and a drop in crude oil prices supported the domestic currency.
On Thursday, the rupee opened at 94.91 against the US dollar. Earlier, in the previous trading session, the rupee had strengthened by 19 paise to close at 95.16 per dollar.
RBI’s measures support the rupee
The rupee’s strengthening is being attributed to the RBI’s intervention in the foreign exchange market, measures to control liquidity in the market, and traders reversing some bets on the dollar’s rise.
In early October, the RBI tightened rules related to foreign exchange derivatives trading. This was intended to limit speculation against the rupee. Furthermore, the central bank instructed banks to maintain a 20% reserve for dollar purchases exceeding $2 million.
In another decision related to derivatives trading, the RBI stated that authorized dealers should not allow rebooking of rupee-related foreign exchange derivative contracts after they have been cancelled. This rule applies to both deliverable and non-deliverable contracts.
Dollar Weakens, Crude Oil Prices Fall
Positive signals from global markets also strengthened the rupee. The dollar index, which measures the dollar’s position against major global currencies, fell to 101.99.
Meanwhile, Brent crude, the main benchmark for crude oil, fell nearly 2% to $104.30 per barrel in the international market. The decline in crude oil prices is expected to provide relief to oil-importing countries like India.
According to experts, the rupee could also gain support from reduced direct demand for the dollar from oil marketing companies and improved market sentiment.
94.80 level crucial, further strengthening likely
According to experts, the rupee has broken out of the 95.00 to 95.50 trading range. The 94.80 level is now considered crucial. If the rupee continues to remain below this level, there could be room for further strengthening.
However, currency analysts estimate that the rupee could trade in the range of 95.60 to 97.50 against the dollar by the end of 2026. Most estimates are around the 96 to 97 per dollar range.
Stock market also rises
The domestic stock market also saw a rise on Thursday. Both the Sensex and Nifty were trading with gains of more than one percent in early trade.
The Sensex rose more than 1,000 points to 73,836.71, a gain of 1.45 percent. The Nifty rose 300 points to 22,929.55, a gain of 1.36 percent.
A strengthening rupee, a decline in the dollar index, and softening crude oil prices contributed to a positive market sentiment.
Clarify numbers and levels; tighten the news by reducing repetition; make headlines more precise.