RBI intervenes to support Re

The rupee settled on a flat note at 83.13 (provisional) against the US dollar on Friday amid negative equity markets and rising crude oil prices.

Selling pressure from foreign equity investors weighed on the domestic unit, which has been under pressure due to a stronger American currency for the past few weeks, forex traders said. At the interbank foreign exchange market, the local unit opened weak at 83.17 and traded between the peak of 83.03 and the lowest level of 83.20 against the greenback. The local unit finally settled flat at 83.13 (provisional). On Thursday, the rupee had risen 15 paise to close at 83.13 against the US dollar. Experts attributed the sharp gain in the rupee to RBI’s move as well as some softening in the Greenback.

“It is worth highlighting that RBI’s intervention, particularly at 83.25, played a significant role in supporting the rupee. Additionally, the rupee benefited from a period of weakness in the dollar index,” said Jateen Trivedi, VP Research Analyst at LKP Securities. Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the dollar declined after US Federal Reserve Chair Jerome Powell on Thursday cautioned of a possibility of additional rate hikes, if warranted, on resilient economy and a tight labour market. However, Powell’s remark that a surge in bond yields helped tighten the financial conditions led to expectations that the central bank may not hike rates for now.