The Indian rupee became stronger by 50 paise and reached 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 handle external shocks helped boost market sentiment, as per PTI report. In the interbank foreign exchange market, the rupee opened at 95.72 against the US dollar and later touched 95.24 during the day.
Rupee gains strongly
The 50-paise gain was much higher than Thursday's movement, when the rupee had risen only 2 paise to close at 95.74 against the dollar. On Friday, the RBI kept key interest rates unchanged for the second straight policy meeting, as per reports. The central bank said it is closely watching rising energy prices and supply disruptions linked to the West Asia crisis before making further rate decisions.
RBI keeps rates same
RBI Governor Sanjay Malhotra announced the second bi-monthly monetary policy of the current financial year. Malhotra said the Monetary Policy Committee (MPC) unanimously decided to keep the repo rate unchanged at 5.25%, as per the PTI report. The RBI also maintained a "neutral" policy stance, meaning it can either raise or cut rates in the future depending on economic conditions.
{{/usCountry}}RBI Governor Sanjay Malhotra announced the second bi-monthly monetary policy of the current financial year. Malhotra said the Monetary Policy Committee (MPC) unanimously decided to keep the repo rate unchanged at 5.25%, as per the PTI report. The RBI also maintained a "neutral" policy stance, meaning it can either raise or cut rates in the future depending on economic conditions.
{{/usCountry}}The central bank increased 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 updates
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 moved higher, with Brent crude rising 0.36% to USD 95.37 per barrel in futures trading.
India's stock markets were under pressure despite the stronger rupee. The Sensex fell 142.06 points, or 0.19%, to 74,217.95 during trading. The Nifty also declined 38.75 points, or 0.17%, to 23,377.80. Foreign Institutional Investors (FIIs) sold Indian equities worth ₹4,447.06 crore on a net basis on Thursday, according to exchange data cited by PTI.
The RBI lowered India's GDP growth projection to 6.6% from the earlier estimate of 6.9%. At the same time, the RBI raised its 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 after the RBI's policy measures, easing of investment rules, and confidence in India's foreign exchange reserves.