The Indian rupee surged 67 paise against the US dollar on Friday, closing at 95.18, as positive domestic market sentiment and likely intervention by the Reserve Bank of India (RBI) supported the local currency.
Rupee Trading Range
At the interbank foreign exchange market, the rupee opened at 95.40 and traded in a range of 94.95 to 95.53 before settling at 95.18, marking a significant gain from its previous close. The sharp recovery came amid a broad weakness in the US dollar overseas and sustained foreign fund inflows into Indian equities.
Market Drivers
Forex traders attributed the rupee's strength to a combination of factors, including a decline in crude oil prices and robust domestic macroeconomic data. The dollar index, which measures the greenback against six major currencies, slipped 0.3% in global trade, providing further support to emerging market currencies.
Meanwhile, the 30-share BSE Sensex rallied over 500 points in intraday trade, reflecting positive investor sentiment. Analysts noted that the RBI's suspected intervention through state-run banks also helped stem any sharp volatility in the currency markets.
Outlook
Market participants remain cautious ahead of key US economic data releases next week, which could influence the Federal Reserve's monetary policy stance. The rupee is expected to trade in a broad range of 94.50 to 96.00 in the near term, with global risk appetite and central bank actions being key determinants.
The rupee's recovery comes after a period of sustained pressure, with the currency having weakened to record lows earlier this year. The latest gain provides some respite to importers and businesses with foreign currency exposure.
