Rupee jumps 40 paise to close at 95.38 against US dollar

On Tuesday, the Indian rupee surged 40 paise, closing at 95.38 against the US dollar, marking a third consecutive day of strengthening. This rise was driven by various measures by the Reserve Bank of India (RBI) aimed at reducing spot dollar demand and curbing speculative trading. These steps included setting up a dedicated dollar window for oil marketing companies and imposing higher costs on certain foreign exchange hedging transactions.

The rupee opened at 95.53 against the dollar in interbank foreign exchange, with intraday trading peaking at 94.96 and bottoming out at 95.53. By the day's end, the provisional rate stood at 95.38, a 40-paise increase from the prior close.

The rupee had jumped 93 paise on Monday, its steepest single-day gain in over six months, reaching 95.78 against the dollar. Over the past three trading sessions, the currency has gained 150 paise versus the greenback. Analyst Dilip Parmar from HDFC Securities attributed the gains to regulatory actions by the RBI to limit volatility and curb speculative trading, alongside a general decline in the dollar and lower oil prices, along with stabilizing domestic equity markets.

Finance Minister Nirmala Sitharaman acknowledged the rupee's depreciation over the past year and a half, vowing continued RBI efforts to prevent excessive volatility. The central bank introduced a special dollar window for oil marketers and tightened forex derivatives regulations to curb speculative positions against the rupee. Banks were also mandated to hold a 20% reserve for large dollar purchases.

The minister emphasized that most of the rupee's fluctuations stemmed from external challenges, with domestic macroeconomic fundamentals remaining solid.

Meanwhile, the dollar index slipped to 102.32, down 0.26%, while Brent crude oil fell 1.93% to $104.59 per barrel. On the Indian equity market, the Sensex rose 1,109.10 points to 73,033.78, and the Nifty climbed 358.60 points to 22,721.95. Foreign Institutional Investors (FIIs) netted out equity sales of Rs 1,708.48 crore on Monday.