The Indian rupee advanced to 95.16 per dollar, marking its strongest level since August 5. This appreciation was largely attributed to intervention by the Reserve Bank of India (RBI), which reportedly sold dollars in the early hours of trade and in the offshore market. The currency's rally also received a significant boost from equity index-related inflows on the last day of the month, specifically due to the implementation of MSCI rebalancing changes that triggered stop-losses for many traders around the 95.20-95.25 levels.
Additional support for the rupee came from the final operational day of the RBI's special Foreign Currency Non-Resident (FCNR(B)) deposit window, which had successfully attracted substantial dollar liquidity. This inflow enhanced the RBI's capacity to manage intraday volatility and stabilize the domestic financial markets through dollar sales. Despite a rise in crude oil prices to $91 per barrel and expectations of a potential US rate hike, the rupee strengthened, partially aided by a softer dollar index.
The rupee opened at 95.42, stronger than the expected 95.55-95.60, likely due to RBI dollar sales. The currency traded between 95.10 and 95.50, with the most significant gains occurring in the second half of the trading day. Dealers noted that banks were actively working to secure FCNR(B) deposits, which provided the RBI with more resources to support the rupee.
