Rupee's Biggest Weekly Gain Against the US Dollar in 20 Months
During today's session, the rupee traded in a range of 73.28 to 73.87 per the US dollar.
The rupee rose nearly 2% for the week, its biggest weekly gain since the week ending December 21, 2018. The currency had been trading in a tight range until this week with traders saying that Reserve Bank of India was seen regularly buying dollars via state-run banks to prevent a sharp appreciation in the rupee. Rupee rose to 6-month high against US dollar.
"The rupee strengthened as nationalised banks stepped away from bid. While the central bank buys USD aggressively, it steps off from time to time to let the USD-INR pair align with the broad USD trend," said Abhishek Goenka, founder and CEO of IFA Global.
Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services said that sharp gains in the rupee-USD pair has been very "unexpected and traders are in shock, with every major support being tested."
"Initially, RBI was protecting 74.50 zone but its absence has led to a free fall. Globally, risk sentiments have strengthened on aggressive stimulus by Fed and there has been sharp inflows into local stocks," he said.
Dollar inflows into the stock market and gains in other Asian peers have helped fuel the rupee's strength. Foreign portfolio investors (FPIs) have bought $6.2 billion worth of shares so far this month. Indian stock market benchmark Sensex is up about 5% so far this month.
The RBI is however expected to keep intervening intermittently and continue building its forex reserves, which are up to $60 billion at $535.35 billion since the start of the fiscal year in April