Indian rupee opened 17 paise up today on likely support provided by the Reserve Bank of India (RBI) leading to consecutive appreciation in two days.
The local currency opened at 89.0650 against the US dollar, as compared to 89.2375 against the greenback at previous close.
"With RBI controlling the rupee the importers are getting the dips to buy the dollar as yesterday RBI
sold in the NDF and allowed that appreciation. However, with RBI short on the dollar there is a good
chance we could get higher levels on the dollar rupee in the coming days," said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP.
This is the second consecutive day when the central bank is expected to have seen in the market to support the local unit.
On November 24, RBI Governor Sanjay Malhotra during an interview with Zee Business had said Indian rupee has seen a fall of 3-3.5 percent annually. The fall is a natural fall of the local currency.
Fresh RBI data showed the central bank had sold a net $7.91 billion in September, tightening the screws on volatility. Forward book positions also climbed to $59.4 billion, reinforcing that the RBI intends to protect the spot curve.
"For now, 88.90–90.20 looks like the operating band. The big line in the sand remains 88.80, now a stronger support. A close below that would hint at renewed rupee strength — but until then, the market is likely to oscillate within the newly defined zone," said Amit Pabari, managing director at CR Forex Advisors.
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