Rupee Posts Decade-High Jump As RBI Tightens Currency Markets

The Indian rupee rose sharply on Thursday, marking its steepest single-day gain in almost 13 years, closing at 93.10 against the US dollar. The surge followed intensified measures by authorities to curb speculative trading in the currency market.

During the trading session, the rupee appreciated by up to 1.7 per cent, touching 93.25, its strongest rise since September 2013.

Market activity picked up as trading resumed after a three-day holiday break.

The rally was supported by recent policy measures introduced by the Reserve Bank of India. These steps aimed to tighten oversight in both domestic and offshore currency markets.

Banks have been restricted from offering rupee non-deliverable forward contracts to both resident and non-resident clients.

Additionally, companies are no longer permitted to rebook previously cancelled forward contracts.

Earlier measures included imposing a cap of $100 million on banks’ net open rupee positions. They also involved restricting foreign exchange derivative transactions with related entities.

These initiatives are designed to limit speculative activity and stabilise the rupee.

The rupee’s upward movement was also influenced by better global risk sentiment following remarks by Donald Trump, which indicated a preference for negotiations over further escalation in geopolitical tensions.

Despite this, analysts noted that uncertainty remains high, which could continue to drive volatility in currency markets.

India’s strong foreign exchange reserves, estimated at over $700 billion, were cited by experts as a key factor providing resilience against external pressures. These reserves also enable the central bank to step in if required to manage volatility.

Even as the rupee strengthened, global equity markets showed weakness.

Major Asian indices, including Japan’s Nikkei, Hong Kong’s Hang Seng, and South Korea’s KOSPI, declined by up to 3 per cent amid rising geopolitical concerns in West Asia.

Oil Prices Spike Sharply

Crude oil prices moved sharply higher, further contributing to global uncertainty. Brent crude futures rose by 5.24 per cent to $106.47 per barrel. US WTI crude increased by 4.5 per cent to $104.64 per barrel.

Currency markets remained closed earlier in the week due to holidays such as Mahavir Jayanti. They were also shut for the beginning of the new financial year.

Trading will be paused again on Friday in observance of Good Friday.

Although the rupee’s recent rally reflects improved sentiment and regulatory backing, analysts believe that fluctuations are likely to persist in the near term due to ongoing global uncertainties.

Also Read: 650 Million Strong: Airtel Becomes World’s No 2 Telecom Giant