Rupee gains 82 paise to 94.96 against dollar as RBI measures support recovery

• The rupee strengthened 82 paise to 94.96 against the US dollar in early trade on Tuesday, extending Monday’s sharp recovery

• Traders said RBI measures to ease spot dollar demand and restrict speculative forex positions supported the currency

• Domestic equities advanced as the dollar and crude oil weakened, despite continued foreign fund selling and higher retail inflation

The rupee appreciated 82 paise to 94.96 against the US dollar in early trading on Tuesday, extending its recovery as Reserve Bank of India measures helped ease immediate demand for dollars and curb speculative positions in the foreign exchange market.

The currency opened at 95.53 at the interbank foreign exchange market before strengthening to 94.96. It had closed at 95.78 on Monday after gaining 93 paise, its biggest single day rise in more than six months.

Forex traders attributed the improvement to measures including a dedicated dollar window for oil marketing companies through designated banks and increased costs for certain foreign exchange hedging transactions. These steps are expected to reduce demand for dollars in the spot market and discourage speculative bets against the rupee.

“With the RBI’s measures supporting the rupee, we expect USD/INR to move towards 95.00–94.80 range in the near term,” said Amit Pabari, managing director of CR Forex Advisors.

On Saturday, the RBI tightened rules for foreign exchange derivatives transactions and directed banks to maintain a 20 per cent reserve for dollar purchases exceeding $2 million.

It also instructed authorised dealers not to allow users to rebook cancelled foreign exchange derivative contracts involving the rupee, whether deliverable or non-deliverable.

A softer dollar and lower crude prices provided additional support. The dollar index, which measures the greenback against a basket of six currencies, fell 0.15 per cent to 102.43. Brent crude futures declined 1.11 per cent to $105.47 a barrel.

Indian equities also rose in early trade. The Sensex gained 305 points to 72,224.15, and the Nifty advanced 93.40 points to 22,458.50.

Foreign institutional investors remained net sellers, offloading equities worth Rs 1,708.48 crore on Monday, according to exchange data.

The currency’s recovery came against the backdrop of a sharp rise in domestic retail inflation. Government figures released on Monday showed consumer price inflation increased to 5.54 per cent in September from 4.83 per cent in August, driven by higher onion and other food prices.

The September reading remained within the RBI’s tolerance band, according to data from the National Statistics Office.

With PTI inputs