The rupee rose for the second consecutive session on December 22 on continuous intervention by the Reserve Bank of India (RBI) after it sank to new lows in the last few days.
The currency opened 24 paise up at 89.41 against the US dollar after closing at 89.65 against the greenback on December 19.
"For now, volatility remains the theme. Much will depend on follow-through in RBI actions and global dollar moves. That said, 89.20 has emerged as a crucial level. A sustained break below this could open the door toward the 88.50–88.30 zone in the near term," said Amit Pabari, managing director at CR Forex Advisors.
Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP, said the rupee’s rise could also indicate some tailwinds from the lower trade deficit in November, as also FPIs who have become buyers of Indian equity and thus sellers of dollar.
"Exporters can wait for selling as and when RBI steps in to buy its short dollar positions, while importers can buy this major dip," he said.
On December 19, the rupee staged a strong comeback, rising past the psychologically important 90-mark against the US dollar to settle at its highest level in over two weeks and outperformed peers.
Currency experts said the move has been supported by RBI’s heavy intervention over two days.
The currency closed at 89.65 against the dollar, up from an opening level of 90.15 and the previous close of 90.25. It marked the rupee’s strongest finish since December 1, when it closed at 89.55.
According to Bloomberg data, the rupee appreciated 0.67 percent in a single day, emerging as the best-performing currency among Asian peers.
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