The rupee made a remarkable recovery in early trade on Wednesday. It surged 88 paise from its all-time closing low to reach 87.93 against the US dollar. This positive shift came as the dollar index eased following signals from the US Federal Reserve. Forex traders noted that declining crude oil prices and suspected RBI intervention played key roles in boosting the domestic currency.
At the interbank foreign exchange market, the rupee opened at 88.74 against the US dollar. It quickly gained momentum and touched an intraday high of 87.93. This represented a significant gain of 88 paise from the previous session’s close. The currency later settled at 88.33 against the American currency, showing sustained strength.
Just a day earlier, the rupee had depreciated 13 paise. It closed at an all-time low of 88.81 against the greenback, causing concern among investors. The sharp turnaround within 24 hours highlights the volatility in currency markets. Multiple factors contributed to this swift change in direction.
Fed Chair Jerome Powell’s comments on Tuesday were pivotal. He indicated more rate cuts in the current year as unemployment rises. Powell also flagged concerns about stubborn inflation. He warned about future risks from tariffs and restrictive immigration policies, according to Anil Kumar Bhansali of Finrex Treasury Advisors LLP.
Meanwhile, the dollar index fell 0.20 percent to 98.85. This gauge measures the greenback’s strength against a basket of six currencies. The slight decline reflected market anticipation of ongoing issues. Trade tensions and the US shutdown influenced investor sentiment.
The dollar index dropped to 99.03 levels, down about 0.24 percent from the previous session. Market participants anticipated concerns over US-China trade tensions. The persistent US shutdown also weighed on the dollar. These factors supported the dollar in the short term despite global economic uncertainty.
With no economic data from the US due to the shutdown, typical dollar moves were affected. The shutdown continues for a third week with no resolution in sight. This lack of data creates an unusual trading environment. Currency markets are reacting to broader geopolitical and economic signals instead.
Brent crude futures traded 0.43 percent lower at USD 62.12 per barrel. The ongoing US shutdown contributed to the decline in oil prices. As the shutdown enters its third week, no signs of reconciliation have emerged. Lower crude prices often benefit oil-importing countries like India.
On the domestic equity front, the Sensex climbed 354.57 points to 82,384.55 in early trade. The Nifty was up 109.55 points to 25,255.05. This rally in stocks complemented the rupee’s recovery. Positive sentiment in equities often correlates with currency strength.
Foreign Institutional Investors sold equities worth Rs 1,508.53 crore on Tuesday. This data came from exchange records and highlighted recent foreign fund outflows. Despite this, the rupee managed to stage a comeback. The resilience suggests underlying support for the currency.
The rupee’s rebound demonstrates how interconnected global factors are. Fed policy, oil prices, and domestic intervention all play a part. Traders will watch for further developments in US monetary policy. Any new signals could influence the rupee’s trajectory.
Market participants are closely monitoring RBI actions. Suspected intervention helped stabilize the currency during volatile times. Such measures provide a cushion against extreme fluctuations. They ensure orderly market conditions.
The rupee’s performance remains a key indicator of economic health. Its recovery from record lows boosts confidence. Investors and policymakers alike welcome such positive movements. It reflects improved market sentiment.
Looking ahead, the focus will be on US economic data once the shutdown ends. Until then, currency markets may continue to react to Fed statements and global events. The rupee’s ability to hold gains will be tested. Traders remain cautious but optimistic.