On Wednesday, the Indian rupee was strong and rose by 31 paise to close 89.87 (provisional) against the US dollar with suspected reserve bank of India (RBI) intervention and lower global crude oil prices.
The rupee started the day on a bad footing in the interbank foreign exchange market of 90.20 against the greenback. It had a spurious volatility during the trading session and reached an intraday high of 89.75 and a low of 90.23 and ended the trading session with a firm high. The appreciation was a further extension of a re-bound in the currency following a four day losing streak on Tuesday when it had closed 12 paise higher at 90.18.
Forex dealers credited the strength of rupee to probable sales of dollar by the RBI to control the excessive volatility, as well as pressure exerted by declining crude oil prices. The world oil standard, Brent crude, fell 0.99 per cent to USD 60.10 per barrel in the futures market which brought relief to the economies that are dependent on oil imports such as India and the local currency.
In the international arena, the dollar index that gauges the strength of the US currency over a basket of six leading currencies rose marginally by 0.07 percent to 98.65, capping stiffer appreciation in the rupee. Market participants were still careful as they were still worried about the global interest rates, as well as geopolitical uncertainties.
In the meantime, the domestic equity markets were seen to be in the red. The index Sensex dropped by 102.20 or closed at 84961.44, and the wider Nifty dropped 37.95 or closed at 26,140.75. Other factors that continued to affect sentiment, includes the continued selling of stock by foreign institutional investors (FIIs) where overseas investors liquidated equities valued at ₹107.63 crore on Tuesday based on exchange data.
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