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RBI Steps In: Indian Rupee Stabilizes Against Dollar
5 Mar
Summary
- Reserve Bank of India intervened to curb rupee volatility.
- Rupee gained 45 paise, closing at 91.60 against the US dollar.
- Geopolitical conflict and rising crude oil prices create pressure.
The Indian rupee experienced a rebound on Thursday, closing at 91.60 against the US dollar with a gain of 45 paise. Forex analysts attribute this recovery to reports of intervention by the Reserve Bank of India and positive sentiment in domestic equity markets.
Despite the recent gains, the rupee faces ongoing pressure from a strong US dollar, escalating crude oil prices, and significant withdrawal of foreign funds. These factors, coupled with geopolitical uncertainties arising from the conflict involving the US, Israel, and Iran, contribute to market volatility. The currency had previously touched an all-time low of 92.05 on Wednesday.
Experts warn that rising international crude oil prices could sharply increase India's import bill, as the nation relies on imports for 85% of its fuel needs. The domestic equity market saw a recovery, with the Sensex and Nifty posting gains. However, foreign institutional investors were net sellers of equities on Wednesday, indicating continued investor caution.
