Rupee jumps the most in over three-years on RBI support; trades at 90.33/$

The Indian currency strengthened past 90-per-dollar mark in Wednesday's session as the central bank curbed excess volatility

 

The rupee recorded its best intra-day gain against the US dollar since November 2022 as the Reserve Bank of India (RBI) stepped in to restrict runaway depreciation, according to forex traders. In the previous session, the rupee had hit a fresh low at 91.08 against the greenback.

 

The Indian unit strengthened past the 90-per-US dollar mark briefly as it jumped 1 rupee 6 paise to 89.97 from Tuesday's close of 91.03 against the greenback. As of 12:20 p.m., the rupee was trading at 90.33 against the US dollar.

 

The rupee saw a sharp intra-day recovery against the US dollar, strengthening from levels near 91.07 to around 90.00, aided by timely intervention from the RBI. The central bank stepped in to curb excessive volatility and prevent a disorderly move, signalling its discomfort with rapid depreciation beyond recent ranges, said Abhishek Goenka, founder and CEO, IFA Global and Billionz.

 

The rupee was the top gainer against the US dollar among Asian currencies. It rose 1.17 per cent to the day's high and marked the best intra-day gain since Nov 10, 2022, according to data on Bloomberg.

 

The dollar index, which measures the strength of the greenback against six major currencies, rose 0.30 per cent to 98.44 on concerns over the US Federal Reserve's rate cut outlook. However, the index could not recover much from its two-month low level. 

 

"Stronger November payroll print was offset by sharp downward revisions to October jobs data and a rise in unemployment to 4.6 per cent, reinforcing expectations that the Fed will stay on hold in January," said Ritesh Bhanshali, deputy CEO, Mecklai Financial Services Ltd.

 

The rupee has been under pressure since November because of external volatility. In the previous session, it hit a record low of 91.08 a dollar as foreign fund outflow amid expectation of a delay in the US-India trade deal weighed. Moreover, the RBI conducted a three-year dollar/rupee buy-sell swap on Tuesday which further weighed on the Indian unit.

 

The Indian currency has been the worst performer against the greenback among other Asia currencies so far in this year.  

 

The USDINR pair continues to move higher, staying comfortably above the 20- and 100-day averages, which keeps the trend bullish. Strength remains intact, though relative strength near overbought levels hints at a brief consolidation or shallow dip. Support is placed around 90.50 and 89.80, while the next resistance zone is near 91.20 to 91.50, keeping the overall outlook positive, Bhanshali said.