 "Rupee hits six-week high; RBI announces fresh OMO to ease liquidity crunch")
The rupee appreciated to a six-week high on Tuesday with the dollar index continuing to weaken and dollar sales by exporters sustaining, as the financial year nears its end, said dealers.
The domestic currency saw a five-day winning streak after six months, that is, since September 2024.
The local currency strengthened by 23 paisa to settle at 86.57 per dollar, against the previous close of 86.80 per dollar. However, dollar bids by state-owned banks capped gains, said dealers.
“The dollar was down, which is positive. Foreign banks and exporters were on the selling side because we are at the end of the financial year,” said a dealer at a private bank.
“Public sector undertaking (PSU) banks were on the buying side of dollar on Tuesday,” he added.
The dollar index fell by 0.2 per cent to 103. It measures the strength of the greenback against a basket of six major currencies.
Market participants said the rupee is expected to maintain a steady trajectory, barring any unfavourable US economic data.
Key US economic data to be released this week include retail sales, the US Federal Reserve’s (Fed) policy meeting, and its subsequent statement. The decision on interest rate by the Fed is scheduled late Wednesday evening.
“The rupee is seen tracking the dollar index for now,” said a dealer at a state-owned bank. “The Fed’s dot plot and commentary are in focus,” he added.
The rupee has appreciated by 1.09 per cent in March so far, tracking the fall in the dollar index. Whereas, during the current financial year, it witnessed a 3.65 per cent fall. In this calendar year, the rupee has depreciated by 1.10 per cent.
Meanwhile, the Reserve Bank of India (RBI) announced yet another open market operation (OMO) auction on March 25 to purchase securities worth ₹50,000 crore.
The central bank will auction government securities, including 7.04 per cent GS 2029, 7.17 per cent GS 2030, 7.26 per cent GS 2032, 7.26 per cent GS 2033, 7.5 per cent GS 2034 and 7.18 per cent GS 2037.
“This additional 50,000-crore OMO announcement is because we are staring at a ₹2.5-trillion deficit,” said a dealer.
Net liquidity in the banking system was at a deficit of ₹2.42 trillion on Monday, latest data by the RBI showed.
So far, the RBI has conducted an OMO purchase auction of ₹2 trillion in 2025, including ₹50,000 crore on Tuesday.
The RBI received bids worth ₹1 trillion, against the notified amount of ₹50,000 crore at the OMO auction conducted on Tuesday.