Commodities & Forex
Rupee hits six-week high of 94.49 on Jio IPO inflows and RBI steps
The currency has recovered more than 2% from near-record lows earlier this month.
The rupee touched 94.49 per dollar on Wednesday, its strongest level in six weeks, and was at 94.56 late in the morning, up about 0.4% from Monday's close of about 94.91, Business Standard reported.
Three things are helping. Foreign money is coming in to buy Jio shares. The RBI has changed rules to reduce dollar demand in the spot market, the market for immediate currency exchange, including steering oil companies' dollar purchases elsewhere and making some importer hedges costlier. And the RBI has been selling dollars when needed. A trader at a state-run bank told Business Standard that foreign banks were selling dollars and the next level to watch is around 94.30.
Not everyone expects the gains to last. HSBC analysts expect the dollar-rupee rate to resume a 'modest upward drift' because India imports more than it exports and inflation is higher than in peer countries. Brent oil near $110 is another headwind.
Key takeaway: the rupee's bounce is driven by one-off IPO flows and RBI action; oil prices and foreign share selling will decide whether it holds.
A softer dollar index (about 101.8) and lower US yields are helping many emerging-market currencies this week.
A firmer rupee slightly lowers the cost of imported oil, gold and electronics, and of foreign travel and fees, but trims rupee earnings for exporters.
Written with AI assistance by TotalMarket. Based on the sources linked in this article; key facts and data should be checked against the original sources. This article is for information only and is not investment advice.
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