Rupee gains 145 paise in two trading sessions, but disquiet sets in forex market
On Tuesday, the rupee ended at a five-week high, gaining 49 paise to close at 95.28 per US dollar
The Indian rupee experienced a 145-paise increase over two trading sessions after the Reserve Bank of India (RBI) introduced measures to curb speculation and volatility in the forex market. However, concerns arose following the central bank's announcement of additional restrictive measures. Treasury officials suggested that the new guidelines may complicate banks' treasury operations.
The rupee rose by approximately 50 paise on Tuesday, driven by a few buyers in the market and a narrowed spot bid/ask spread. The RBI mandated banks to maintain a Foreign Exchange Risk Reserve (FERR) for forex derivative contracts, which could increase banks' costs. Despite the recent gains, analysts like Dilip Parmar noted that the Indian currency is still vulnerable to external macroeconomic pressures.
The RBI also imposed restrictions on rebooking cancelled foreign exchange derivative contracts and reduced the threshold for such transactions.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.