Rupee Gains 7 Paise Against Dollar on Reserve Bank Support

The domestic currency gained ground for the sixth consecutive session on Friday, closing 7 paise higher at 94.92 against the U.S. dollar due to central bank steps to control spot dollar demand. At the interbank foreign exchange market, the currency opened at 94.75 and moved between a high of 94.71 and a low of 95.06 during the day before settling at its provisional close of 94.92. On the previous day, the currency had appreciated 18 paise to close at 94.99. Foreign Institutional Investors sold equities worth ₹5,285.37 crore on a net basis on Thursday.

Market Factors

High crude oil prices and foreign money leaving the country limited how much the currency could rise. Global oil benchmark Brent crude traded down 0.34 percent at $105.56 per barrel, while the dollar index fell 0.41 percent to 101.445. On the stock market front, the Sensex climbed 413.66 points to close at 74,729.27, and the Nifty rose 148.80 points to end at 23,146.15.

Expert View

Kaveri More, a commodity technical analyst at Choice Broking, said the currency is nearing a support zone around 94. Persistent pressure from high crude oil prices, rising U.S. Treasury yields, and foreign equity sales has led the Reserve Bank to step up its intervention to protect domestic inflation and financial stability. The central bank has reportedly deployed around $75 to $80 billion through spot dollar sales and swaps since special measures began on June 8. Ms. More added that future direction will depend on central bank support, crude prices, U.S. bond yields, and foreign investor flows.

Context

Central banks often intervene in currency markets by buying or selling local currency and foreign exchange reserves to limit sudden shocks and maintain economic stability. Factors like crude oil import costs and foreign investor movements heavily influence exchange rates in emerging economies.