Rupee Recovers from Record Low Of 86.64, Ends 8 Paise Higher Against US Dollar
The Indian rupee bounced back slightly on Tuesday, recovering from its historic low of 86.64 against the US dollar. The currency settled eight paise higher at 86.62 (provisional) in the interbank foreign exchange market, supported by positive trends in domestic equity markets and Reserve Bank of India (RBI) interventions.
Rupee’s Intraday Performance
Opening at 86.57, the rupee experienced a day of volatile trading, reaching an intraday high of 86.45. The recovery follows Monday’s sharp decline, where the rupee registered its steepest single-day fall in nearly two years, ending at an all-time low of 86.70 against the greenback.
Factors Influencing the Recovery
The rupee’s rebound was driven by:
- Domestic Equity Market Gains: Macroeconomic data and positive buying in PSU stocks supported investor sentiment.
- RBI’s Intervention: State-run banks were spotted offering dollars, likely on behalf of the RBI, to curb the rupee’s volatility.
- Dollar Index Moderation: The dollar index, which measures the US currency’s strength against a basket of major currencies, cooled to 109.5 after hitting a two-year peak, easing pressure on Asian currencies, including the rupee.
- Crude Oil Prices: Fluctuations in crude oil prices within the $77.50–77 range also helped stabilize the domestic currency.
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Market Insights and Projections
Jateen Trivedi, VP Research Analyst at LKP Securities, noted, “The rupee traded at 86.60 amidst volatility, supported by DII inflows and positive buying in capital markets. The trading range for the rupee is projected between 86.25 and 86.85.”
Investors are now closely monitoring global cues, including the release of US wholesale and consumer price inflation data, which could influence the dollar’s strength and impact the rupee further.
Challenges Ahead
Despite the modest recovery, the rupee remains under pressure due to elevated crude oil prices, persistent outflows of foreign funds, and global economic uncertainties. The RBI has indicated its intent to use foreign exchange reserves judiciously to mitigate currency market volatility amid these strong global headwinds.
The rupee’s recovery from its record low reflects the combined effect of market resilience and strategic interventions by the RBI. With global and domestic factors continuing to influence currency movements, the rupee’s trajectory will depend on upcoming economic data and market sentiment.
