Rupee Hits One Week High as RBI Steps In

Mumbai, April 17: The Indian rupee strengthened on Friday, buoyed by fresh intervention measures from the Reserve Bank of India aimed at easing persistent pressure from heavy dollar demand.

Strong Show

The domestic currency opened 25 paise higher at 92.95 against the US dollar, compared to its previous close of 93.20, as sentiment improved following the central bank’s latest move to stabilise the currency.

The rupee is now trading at a one-week high, up 0.54% at 92.71, emerging as one of the better-performing Asian currencies for the day.

Dollar Window

At the heart of the move is the RBI’s directive to state-run oil refiners—among the largest buyers of dollars in the domestic market—to shift their foreign exchange purchases away from the spot market.

Instead, these firms have been encouraged to tap a special dollar credit line, reportedly routed through the State Bank of India.

This mechanism effectively reduces immediate demand for dollars in the open market, helping ease downward pressure on the rupee. Oil companies typically make large, daily dollar purchases to pay for crude imports, making them a key driver of currency volatility.

Familiar Playbook

The move marks a return to a strategy last deployed during the Russia-Ukraine conflict in 2022, when similar steps were taken to manage currency stress amid elevated oil prices.

By diverting demand away from the spot market, the RBI is attempting to smoothen volatility without directly intervening as aggressively in forex reserves.

Rupee Rebounds

The currency has been under pressure in recent weeks, hit by a combination of rising crude oil prices, foreign portfolio outflows, and geopolitical tensions in the Middle East.

At one point, the rupee had weakened to record lows near 95 per dollar. However, a series of RBI measures—including curbs on speculative positions and tighter oversight of forex markets—have helped it recover by about 2.5 percent since late March.

Friday’s gains suggest that the latest step is beginning to have an immediate impact on market dynamics.

Global Cues

The rupee’s strength was also aided by improving global sentiment, with easing geopolitical tensions and softer crude oil prices lending support to emerging market currencies.

Expectations of progress in US-Iran talks and a ceasefire in parts of the Middle East have helped cool oil prices, reducing concerns around India’s import bill—a key factor influencing the rupee.

Outlook

Despite the uptick, analysts caution that the rupee’s trajectory remains fragile.

While the RBI’s measures may provide near-term relief, sustained appreciation will depend on broader factors such as capital inflows, oil price trends, and global risk sentiment.

For now, the central bank has made its stance clear: it is willing to step in decisively to prevent disorderly moves—but not necessarily to engineer a sharp rally.

Source:

• https://www.dgft.gov.in/CP/?opt=currency-list-exchange-rates