The rupee advanced to 94.25 against the dollar, from the previous close of 94.61. The unit had plunged for four straight days before Wednesday, ending at a lifetime low of 95.28 Tuesday. Dealers said the rebound was driven largely by a retreat in crude prices below $100 a barrel, which prompted traders to unwind short-rupee positions, easing pressure on the currency. It traded between 94.06 and 94.91 on Thursday and the rupee gained more in the second half of the day, traders said.
“For the rupee, 94.50 was a key level where many stop losses were placed. Once that level was decisively broken, the gain was quick. State-run banks were seen selling dollars, likely on behalf of exporters,” said Dilip Parmar, currency research analyst, HDFC Securities.
Brent crude futures fell $2.50, to $98.77 a barrel. Asian currencies were up between 0.2% and 0.6%, while the dollar index eased 0.2% to 97.87, according to Reuters.
Traders expect the rupee to trade between 93.75 and 94.75 on Friday and next week, as the central bank would likely buy dollars to shore up its reserves at around 94/$ levels.
“We did not see the central bank buy dollars today. I think they would wait and absorb the greenback at around 94/$ levels,” said a trader from a public sector bank.
The central bank’s net short forward position widened to a record $104 billion in March, as Mint Road stepped up intervention to defend the rupee amid volatility stemming from the West Asia war.
