Rupee regains ground against dollar on likely intervention by RBI

The local currency ends stronger at 88.69 per dollar amid suspected RBI dollar sales and active state-run banks, dealers see room for more recovery

Rupee regained some ground against the US greenback despite a strong dollar due to likely intervention by the Reserve Bank of India (RBI) via dollar sales, said dealers.

 

The local currency settled at 88.69 per dollar, against the previous close of 88.79 per dollar. It appreciated up to 88.50 per dollar during the day. However, it gave up some gains by the end of the trade.

 

“The move was supported in part by strong central bank intervention, with the RBI and state-run banks increasingly active around the 88.80 level to contain further depreciation,” said Abhishek Goenka, founder and chief executive officer (CEO) of IFA Global. “USD/INR remains trapped in a narrow trading band — roughly 88.40-88.80 — with the RBI’s defensive posture acting as a stabilising force,” he added.

 

Market participants said that the rupee might recover against the greenback by the year-end, potentially strengthening to around 86 per dollar, though near-term volatility may persist.

 

Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP, said: “The USD/INR gave an opportunity to the importers to hedge their payable as it fell to 88.50 but could not sustain its gains as it closed at 88.6850, a good 19 paise off the highs. There were flows from a foreign bank, which acquired a local bank. But change in sentiments was also a factor responsible for the rise, with US President Donald Trump and Prime Minister Narendra Modi doing the talking and the latter also thanking the former for taking trade talks forward.”

 

The rupee has depreciated by 3.63 per cent in the current financial year so far, whereas in the current calendar year, it has witnessed 3.47 per cent fall. However, in October so far, the local currency has appreciated by 0.1 per cent.

 

Meanwhile, India’s foreign exchange reserves fell by $276 million in the week ended October 3 to $699.9 billion. Total reserves fell on the back of a decline in foreign currency assets, which fell by $4 billion. However, gold reserves increased by $3.7 billion during the same period.