Indian rupee witnesses huge recovery on RBI support, trade talk optimism

Mumbai:  The Indian rupee registered its sharpest single-day rise in nearly four months on Wednesday, rebounding from near record lows amid likely intervention by the Reserve Bank of India (RBI) and renewed optimism over the India-US trade negotiations.

The domestic currency climbed as much as 0.9 per cent to 87.9987 against the US dollar during the session — its biggest intraday jump since June 24 — before trimming some gains. On Tuesday, the rupee had slipped to 88.8025 per dollar, close to its all-time low.

Traders attributed the rebound to heavy dollar sales by the RBI in both onshore and offshore markets. Additionally, the central bank acted to stabilise the currency, which has remained largely range-bound in recent weeks as the RBI sought to defend the 89-per-dollar level.

Moreover, sentiment was also buoyed by reports that India is accelerating efforts to conclude trade talks with the United States by next month.

The prospect of a deal, along with a softer dollar on expectations of US Federal Reserve rate cuts, supported the rupee and other Asian currencies.

Dilip Parmar, senior research analyst, HDFC Securities, said the rupee has demonstrated resilience, consolidating in a narrow range over the past two weeks due to central bank intervention and foreign fund inflows. Near-term, spot USD/INR finds support at 88.50 and faces resistance at 89.10, he added.

Meanwhile, the domestic equity indices rallied nearly a per cent on Wednesday after witnessing a decline on Tuesday. At around 1:32 pm, the Sensex was trading at 82,672, up 642 points or 0.8 per cent, while Nifty was trading 205 points or 0.82 per cent higher at 25,352.40.

Earlier, in the morning, Indian stock markets opened on a positive note, taking cues from the upbeat global sentiment. In the early trades, buying was observed across most sectors, with heavyweights such as Bajaj Finserv, Bajaj Finance, NTPC, L&T, Power Grid, BEL, Bharti Airtel, Trent, and Asian Paints.

–IANS