A weaker dollar and a lower-than-expected trade deficit figure helped the rupee, which had been declining for the previous five trading days, recover 28 paise, or 0.33%, against the dollar on Wednesday. This was the biggest rise in almost seven months. The rupee’s stability was also aided by the Reserve Bank of India’s intervention.
After closing at 86.3625 on Tuesday, the rupee had its greatest one-day percentage increase since June 3, 2024. A high of 86.3075 was reached by the currency on Wednesday during intraday trading.
The RBI was observed selling dollars at about 86.51 levels, according to bankers. To lessen any severe volatility in the rupee, the apex bank steps into the foreign exchange market. The RBI concentrates on reducing abrupt swings in the currency rather than aiming for a certain level.
The dollar index’s decline from a peak that lasted more than two years bolstered the rupee. From 109.65 in the previous trading session, the index, which measures the value of the dollar against six of its major peers, weakened to 109.25 on Wednesday. The yield on the US 10-year Treasury note decreased to 4.76%.
Bond yields decreased as the bank’s regulator was expected to take actions to increase liquidity. The yield on the benchmark 10-year bond dropped from 6.822% on Tuesday to 6.814% on Wednesday.
