Rupee ends at 95.81/$ soothed by RBI intervention; surge in forward premiums tipped to cool

On Friday, the Indian rupee closed at 95.8125 per dollar, marking a slight improvement from the previous session's 95.9550. This modest strength in the local currency was attributed to a decline in oil prices, which fell by approximately 2% on Friday, though remained above $100 per barrel. The central bank's intervention played a crucial role in preventing a sharp fall in the rupee, as it had done throughout the week.

Despite the rupee's modest gain, it remained slightly lower than its level from the previous week. Analysts noted that higher global interest rates, resulting from elevated energy prices and the prospect of a potential US-Iran truce, continue to pose risks to emerging market currencies and equities. The Reserve Bank of India's continuous interventions, including sell-buy swaps to absorb excess liquidity and reduce stale positions in the forward market, have helped keep the rupee relatively stable.

This, coupled with a sharp increase in dollar-rupee forward premiums, suggests that the upward pressure on the currency may cool down soon. However, global risk factors might continue to keep market positioning light for now.