After three consecutive days of rally, the Indian currency has made all Asian countries realize that it has not become the king of the currency ring. A rise of 150 paise has been seen in the rupee against the dollar in three days. The rupee has been rising steadily following the RBI’s policy changes and intervention in the currency market.

On Tuesday, a statement came from Nirmala Sitharaman in support of the rupee. Due to which the Indian currency gained more momentum in the currency market. Other reasons also surfaced. Where the bond yield was seen to decline. At the same time, crude oil prices also fell, leading to a rally in the rupee. Apart from this, support was also seen from foreign investors. Let us also tell you what figures the rupee has seen in the currency market…

Rupee hits hat-trick of gains, rises by 150 paise

On Tuesday, the rupee strengthened for the third straight session and closed at 95.38 (provisional), up 40 paise against the US dollar. This was helped by the RBI’s measures aimed at reducing spot dollar demand and curbing excessive positions in the foreign exchange market.

Forex traders said some of the measures – such as a special dollar window for oil marketing companies by designated banks and higher costs for some foreign exchange hedging transactions – are expected to reduce dollar demand in the spot market and curb speculative positions against the rupee.

The rupee opened at 95.53 against the US dollar in the interbank forex market. During intra-day trading, the rupee touched a high of 94.96 and a low of 95.53 against the dollar. At the end of the trading session on Tuesday, the rupee closed at 95.38 (provisional), up 40 paise from its previous close.

On Monday, the rupee appreciated by 93 paise, the highest single-day gain in six months, to close at 95.78 against the US dollar. The rupee has appreciated by 150 paise against the US currency in the last three trading sessions.

90 paise may be increased

Dilip Parmar, senior research analyst at HDFC Securities, said the gains were due to regulatory measures by the RBI to limit volatility and curb speculative trading as well as reduction in long positions, general dollar weakness, lower crude oil prices and recovery in domestic equities.

Spot USD/INR is taking support at 95, after recovering nearly 2 percent in three days from recent highs. However, if it breaks below this level, it is likely to move up to 94.50.

This means the rupee could see a further appreciation of around 90 paise, but due to external macroeconomic pressures, further gains are likely to be limited.

The finance minister came to the rescue of the rupee

Meanwhile, Finance Minister Nirmala Sitharaman said on Tuesday that the rupee has depreciated “significantly” over the past one-and-a-half years, and the RBI will continue its efforts to curb excessive fluctuations in the local currency.

The Reserve Bank announced several measures over the weekend to stem the falling value of the rupee. The central bank had announced a special window for oil marketing companies, which would reduce dollar demand in the spot market.

Additionally, rules for forex derivatives trading were also tightened to prevent speculation against the rupee. Banks were also asked to maintain a 20 percent reserve for dollar purchases of more than $2 million (USD 2 million).

The minister said that most of the volatility in the rupee is due to external challenges, while the government is ensuring that the macro-economic fundamentals within the country remain strong.