The Indian rupee strengthened by 50 paise to 95.24 against the US dollar on Friday after the Reserve Bank of India (RBI) announced new policy measures. Forex traders said investor confidence improved after the RBI relaxed rules for foreign portfolio investors (FPIs) to invest in government securities.
Traders also said the RBI’s statement that India’s foreign exchange reserves are strong enough to deal with external shocks helped boost market sentiment, PTI reported. At the interbank foreign exchange market, the rupee opened at 95.72 against the US dollar and later rose to 95.24 during the day.
strong rise in rupee
The gain of 50 paise was much higher than Thursday’s move, when the rupee had closed just 2 paise higher at 95.74 against the dollar. According to the report, on Friday, RBI kept the key interest rates unchanged in the second consecutive policy meeting. The central bank said it was keeping a close eye on rising energy prices and supply disruptions linked to the Middle East crisis before making further decisions on rates.
RBI kept the rates unchanged
RBI Governor Sanjay Malhotra Announced the second bi-monthly monetary policy of the current financial year. Malhotra said the Monetary Policy Committee (MPC) has unanimously decided to keep the repo rate unchanged at 5.25%, PTI reported. The RBI has also maintained a “neutral” policy stance, meaning it can raise or cut rates depending on economic conditions in the future.
The central bank has increased the investment limits for non-resident Indians (NRIs) and overseas citizens of India (OCIs) in equity instruments. Malhotra clarified that the RBI’s exchange rate policy has not changed and the central bank does not target any fixed value or range for the rupee.
Global Market Update
In global currency markets, the US dollar index, which measures the dollar against six major currencies, was trading at 99.40, up 0.01%. Global crude oil prices rose, with Brent crude up 0.36% to US$95.37 a barrel in futures trade.
Despite the strengthening of the rupee, India’s stock markets remained under pressure. During trading, the Sensex fell 142.06 points or 0.19% to 74,217.95. Nifty also fell 38.75 points or 0.17% to 23,377.80. Foreign institutional investors (FIIs) sold Indian equities ₹Rs 4,447.06 crore on a net basis on Thursday, according to exchange data cited by PTI.
RBI reduced India’s GDP growth forecast to 6.6% from earlier 6.9%. Also, RBI raised the inflation forecast for FY27 to 5.1% from the previous estimate of 4.6%.
Overall, the rupee’s sharp rise was mainly driven by positive investor sentiment following RBI’s policy measures, easing of investment norms and confidence in India’s foreign exchange reserves.
