Rupee logs best single-day gains in over 8 months

The rupee on Friday logged its biggest single-day gain in over eight months, propelled by robust dollar inflows and a continuing rally in the domestic equity markets.

The rupee closed at 83 per dollar , 33 paise stronger compared with the previous close of 83.33. the rupee appreciated below the 83 level to an intraday high of 82.94.

Amit Pabari, MD, CR Forex Advisors, said: “The rupee posted its best day in over 8 months, jumping from 83.32 at the opening to 83.00, reaching an intraday high of 82.94.

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“Surprisingly, the RBI was noticeably absent or may have intervened less.”

On the triggering side, Pabari noted that there were significant corporate-related dollar flows. Additionally, re-balancing from FTSE, likely in HDFC Bank worth $500 million, also contributed to the rupee’s surge against the dollar.

“Global factors were already in play, with the US DXY (Dollar Index) below 102 after a dovish Fed and the US 10-year yield breaching the 4 per cent mark.

“On the domestic front, both indices — Nifty and Sensex — were hitting fresh highs, with total FPI flows into equities surpassing ₹40,000 crore…Overall, the rupee is moving towards its fair value,” he said.

‘Low volatility’

In his December 8 monetary policy statement, RBI Governor Shaktikanta Das underscored that the rupee has exhibited low volatility compared to its EME (emerging market economy) peers in the calendar year 2023, despite elevated US Treasury yields and a stronger US dollar.

“The relative stability of the Indian rupee reflects the improving macroeconomic fundamentals of the Indian economy and its resilience in the face of formidable global tsunamis,” he said.

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IFA Global, in a report, said the rupee opened the session marginally higher at 83.30 this morning amid broad dollar weakness.

“The domestic unit was unexpectedly volatile as it registered its highest single-day gains in over 8 months. The positivity surrounding domestic equities and dollar inflows aided the rupee in breaching psychological support of 83 and trading between 83.3275 and 82.93 with a major strengthening bias.

“It concluded the session 33 paise stronger at 83. It was the best-performing currency today,” per the report.