The local currency gained around 39 paise on Friday to close at 85.97 against the dollar. Rupee opened stronger at 86.22, touched day’s high of 85.93 because of aggressive dollar sales by foreign on behalf of their clients.
The rupee appreciated from last Thursday’s closing level of around 86.997, up 1.2% for the week, its best in more than two years.
The rupee hit an all-time low of 87.95 to the dollar on February 10, 2025, having strengthened 2.3% till today owing to RBI’s intervention to improve dollar liquidity and buy/sell USD/INR swaps amounting to USD 15bn.
According to foreign exchange dealers, the rupee’s recent gains are on the back of a combination of factors such as bouncing back of the domestic equity market as FPI have turned buyers this week, correction in the dollar index, and unwinding of the speculative long-dollar positions.
Inflows were attributed to the rebalancing of the FTSE’s All-World Index, which came into effect Friday. Dealers said that a chunk of the expected inflow of $1.4-$1.6 billion related to the rebalancing likely to have come on Friday, dealers said.“Overall, there has been improvement in the supply of dollars. In addition to the FPI inflows, there have also been year-end inflows from corporates. Some banks are cutting their long-dollar positions because stop losses were triggered,” Ritesh Bhansali, deputy CEO of Mecklai Financial Services Ltd.The Reserve Bank of India’s dollar liquidity support through FX swaps has also helped in the rupee’s appreciating trend since the start of this month.
On February 28, the RBI conducted a $10 billion dollar-rupee buy-sell swap to address the deficit banking system liquidity, where the central bank bought dollars in exchange for rupees. The central bank is scheduled to conduct a similar swap of $10 billion on Monday.
