This marked the third day of appreciation in a row, bouncing back from the all-time low of 91.08 seen Tuesday. This is also the strongest closing level since November 26.
A likely central bank intervention at the fag end of Friday’s trade helped the currency gain sharply, poeple tracking the market said. Before that the rupee traded between 89.95 and 90.30. It opened at 90.13 against Thursday’s close of 90.24 a dollar.
“A possible intervention by RBI just five minutes before closure of the market brought the rupee to close strong at 89.27. Being a very thin market before the year-end, any small volume creates volatility in the currency market, which exactly happened today from 3.25 p.m. to 3.30 p.m,” said KN Dey, a veteran forex market consultant.
It’s a good time for importers to cover their payments, he added.
Meanwhile the one-year forward premium rose to 2.84%, the highest since October 2022 due to high hedging demand.
“The sharp appreciation (in the spot market) propelled the rupee to the top of Asian currency rankings, fueled by robust corporate dollar inflows and a clear pivot back toward risk-on sentiment,” HDFC Securities deputy vice president Nandish Shah said.According to NSDL data, there was a net inflow of $194 million on Friday. Overall in December so far, overseas portfolio investors sold a net $10.145 billion in Indian markets.
The central bank has intervened in the market decisively in the past three days, helping the struggling currency bounce back.
“With the RBI likely engaging in proactive intervention, the short-term outlook for USDINR has turned bearish,” he said.
