On Wednesday, the rupee strengthened by 47 paise and closed at 92.59 (provisional) against the US dollar. This came as US President Donald Trump announced a two-week pause in military strikes against Iran, and the Reserve Bank kept the key benchmark rate unchanged with its neutral policy. Forex traders said investor confidence increased after Governor Sanjay Malhotra assured that the steps taken on forex are not a structural change. Furthermore, despite recent developments in some private banks, confidence was expressed about the health of the banking system. Malhotra said that the banking sector regulator did not find any issues related to governance or conduct during the supervisory inspection of HDFC Bank. Let us also tell you what kind of data was seen regarding the rupee in the currency market.
Big rise in rupee
At the Interbank Foreign Exchange market, the rupee opened at 92.92 against the US dollar, then strengthened to touch 92.56 in early trade, and finally closed the day at 92.59 (provisional) against the US dollar, registering an increase of 47 paise over the previous close. On Tuesday, the rupee had fallen 16 paise to close at 93.06 against the American currency. The Reserve Bank of India kept its key policy rates unchanged on Wednesday, adopting a wait-and-watch approach as policymakers assessed the impact of the six-week Iran conflict on energy supplies, inflation and growth. The central bank’s six-member monetary policy committee unanimously voted to keep the benchmark repo rate at 5.25 percent. The committee pointed to increased uncertainty following the sharp rise in crude oil prices, the weakening of the rupee and disruptions in trade flows due to the Middle East conflict. RBI’s policy position was maintained neutral.
Dollar fell, market rose
Meanwhile, the dollar index, which measures the US dollar’s strength against a basket of six currencies, fell 0.96 per cent to 98.90. Following the ceasefire announcement, global oil benchmark Brent crude was trading at USD 94.27 per barrel, down 13.73 per cent in futures trade. Talking about the domestic equity market, Sensex jumped 2,946.32 points to close at 77,562.90, while Nifty rose 873.70 points to 23,997.35. According to exchange data, foreign institutional investors sold equities worth Rs 8,692.11 crore on Tuesday.
RBI estimates
RBI said that it expects the average price of crude oil to be US $ 85 per barrel in the financial year 2027 and the rupee to be at the level of 94 against the dollar. The central bank has made these estimates in its half yearly monetary policy report released on Wednesday. The crude oil price estimate for FY2027 has been raised to US$85 per barrel, compared to the estimate of US$70 per barrel for the second half of FY2026 (H2FY26). According to the report, it has raised the exchange rate forecast against the US dollar to 94 during FY27, from 88 during H2FY26.