Over the past decade, the rupee has typically closed stronger on March 31 compared to its weakest point in the previous quarter. This pattern is not accidental. Intervention by the Reserve Bank of India tends to intensify in the final week of March, supporting a firmer end-of-year level.
Such an outcome is considered favourable for corporate balance sheets. Companies usually convert foreign currency liabilities into rupees at the close of the financial year. A stronger rupee means a stronger balance sheet at year end.
Going ahead, market participants will closely monitor the central bank’s intervention strategy. The current environment presents a notable hurdle for this long-standing trend.
RBI is estimated to have already sold more than $15 billion in March to support the rupee. This massive intervention comes amid geopolitical tensions in West Asia and elevated crude oil prices.
While many traders expect the rupee to close the month near the 91.75 per dollar level, some anticipate a weaker outcome. They see the currency around 92.50 per dollar if the central bank scales back interventions.
Such a pullback could happen should oil prices remain above $100 per barrel. The link between oil and the rupee’s strength is direct and powerful.
Sajal Gupta, head of forex and commodities at Nuvama, shared his perspective. He noted the typical extra intervention in the last days of the fiscal year.
Many corporates state their foreign currency liabilities in rupee terms in their balance sheet. A stronger rupee translates directly into a stronger financial position for these companies.
This time too, stronger intervention is expected. Gupta thinks the rupee would close around 92 per dollar on March 31.
The rupee recently touched a record low of 92.64 per dollar. This occurred on Wednesday amid soaring oil prices and uncertainties in West Asia.
Currency markets were closed on Thursday for the occasion of Gudi Padwa. This brief pause did little to ease the underlying market pressures.
The central bank’s strategy is now under a microscope. Its actions in the coming days will be decisive.
Will the RBI’s support hold against these twin challenges? The answer will shape corporate India’s financial health.
The trend of a stronger March-end rupee faces its toughest test yet. All eyes are on the central bank’s next move.