strengthened for the third consecutive session on Monday, its longest winning streak in a month, powered by market interventions by the central bank and a slump in crude oil prices on hopes of a US-Iran peace deal.
The rupee closed at 95.23 per dollar, up over 1.5 per cent since Wednesday, when it had hit a record low of 96.96 per dollar.
The Reserve Bank of India’s dollar-selling intervention helped the rupee bounce back from its record low last week and optimism over a potential breakthough in negotiations between Washington and Tehran shored up the currency further on Monday.
State-run banks were spotted offering dollars intermittently on the day, four traders said.
The activity is likely meant to be a warning to budding speculative interest against the rupee, a trader at a Mumbai based bank said.
Following its recent depreciation, one could argue that the rupee has become undervalued, Reserve Bank of India (RBI) Governor Sanjay Malhotra said in a media interview.
The RBI does not target any specific level for the currency, Malhotra said, but emphasized that the central bank stands ready to intervene if speculative pressures build up.
Separately, Indian Finance Minister Nirmala Sitharaman urged the country on Monday to focus on fuel, fertiliser and foreign exchange, underlining Prime Minister Narendra Modi’s plea to conserve foreign exchange amid the Iran war.
OIL RELIEF
Brent crude oil futures fell over 5 per cent to $97.8 per barrel, while Asian currencies and stocks gained as the prospect of a deal to end the Iran war buoyed risk appetite.
Iran’s foreign ministry spokesperson said conclusions had been reached on many topics discussed in a potential memorandum of understanding with the US, but this did not mean Tehran was close to signing an agreement.
“If crude oil prices remain contained and global risk sentiment continues to improve, there is a strong possibility that the rupee may gradually appreciate toward the 94.80–94.50 zone in the near term,” said Amit Pabari, managing director at FX advisory firm CR Forex.