Rupee Hits Six-Month High Against Dollar

The rupee briefly touched a six-month high on Friday, climbing to 83.78 against the dollar in early trade, before retreating following probable RBI intervention. The domestic currency closed at 84.58, 9 paise weaker than its previous close of 84.49.

Traders attributed the initial strength to strong portfolio inflows and the unwinding of bearish rupee bets, but said dollar-buying by state-run banks, likely on behalf of RBI, eroded gains.

RBI's Role in Currency Stability

According to dealers, RBI may be aiming to prevent the rupee from appreciating too sharply against the Chinese yuan, as a stronger rupee could undermine export competitiveness and widen the current account deficit.

Weekly and Monthly Performance

The rupee appreciated nearly 1% during the week, buoyed by inflows into Indian equities and optimism surrounding a potential US-India trade deal. It has risen over 3% in the past two months, recovering most losses incurred after the US elections.

Forex Reserves on the Rise

Meanwhile, forex reserves increased for the eighth consecutive week, reaching $688.13 billion as of April 25. This is the highest level in over six months, though still about $17 billion below the Sept 2023 record of $704.9 billion.

These changes reflect both RBI's intervention in the forex market and valuation shifts in foreign assets.

Global Currency Movements

The dollar fell on Friday ahead of jobs data but remained on track for a third straight weekly gain, supported by earlier gains in Treasuries and equities. The yen rose 0.5%, the euro 0.4%, and China's offshore yuan hit a near six-month high.