Rupee Gains 40 Paise To 95.38, RBI Measures Fuel Third Straight Rise

On October 13, the Indian rupee strengthened for a third consecutive day, reaching 95.38 against the US dollar as the Reserve Bank of India (RBI) supported the currency. The session saw the rupee trade between 94.96 and 95.53. After some intraday gains, it closed above Monday's closing level of 95.78. Over three trading sessions, the currency appreciated by 150 paise, marking its biggest single-day gain in over six months at 93 paise.

The RBI tightened forex derivative rules and extended a 20% reserve requirement to banks' own rupee hedges, aiming to reduce spot dollar demand. Forex traders credited the recovery to the RBI's dedicated dollar window for public sector oil marketing companies and tighter foreign exchange derivative rules. Dilip Parmar, a senior research analyst at HDFC Securities, attributed the rupee's advance to regulatory measures, unwinding of long dollar positions, a weaker dollar, lower crude prices, and recovering equities.

However, the rupee's surge remains cautious, with support identified at 95.00 USD/INR. A sustained decline below this level could push the pair towards 94.50, although external macroeconomic challenges may limit further gains. Finance Minister Nirmala Sitharaman said the RBI would continue curbing excessive currency volatility, attributing much of the instability to external challenges while emphasizing the government's focus on maintaining sound domestic macroeconomic fundamentals.