Noida, Sep 2 (APAC Media): The Indian rupee strengthened 6 paise to open at 94.89 against the US dollar on Wednesday, supported by mild dollar selling by foreign banks, positive domestic equity markets and intervention by the Reserve Bank of India (RBI).
The rupee opened on a firmer note compared with its previous close as the central bank, through state-run banks, stepped in to contain volatility in the foreign exchange market, traders said.
“The rupee found initial momentum following dollar inflows and early gains in domestic benchmark indices,” a senior forex trader at a private sector bank said.
However, the broader outlook remained sensitive to movements in global crude oil prices and US bond yields. Market participants said RBI intervention around key levels was helping limit sharp speculative moves in the currency.
An analyst at a Mumbai-based broking said the central bank was actively managing liquidity through spot and forward market operations.
“Range-bound movement is likely to persist in the near term as market participants digest incoming economic data from both domestic and international fronts,” the analyst said.
Despite persistent global macroeconomic headwinds, analysts said India’s domestic fundamentals and the country’s foreign exchange reserves provided a buffer against excessive currency volatility.
Traders will closely monitor Brent crude prices, foreign portfolio flows and the US Dollar Index during the session.
Higher crude prices could put pressure on the rupee by increasing India’s import costs, while sustained foreign investment inflows could provide support to the currency.
Meanwhile, expectations surrounding US Federal Reserve interest rate policy are likely to influence the dollar’s broader movement through the dollar index, traders said.
–ENDS–
Disclaimer:Â 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.
Also Read:
