Rupee strengthened by 50 paise.
The Indian rupee showed strong strength against the US dollar on Friday. The rupee strengthened by 50 paise to 95.24 per dollar after the Reserve Bank of India (RBI) relaxed the rules related to foreign portfolio investment (FPI) in government bonds.
According to foreign exchange market experts, the new announcements of RBI have increased the confidence of investors. The central bank also said that India has adequate foreign exchange reserves, which will act as a strong security shield to deal with global economic shocks and external risks.
The rupee opened at 95.72 per dollar in the interbank foreign exchange market. It increased during trading and reached the level of 95.24. This is a strong increase of 50 paise compared to the previous trading session. Earlier on Thursday, the rupee had strengthened by 2 paise and closed at 95.74 per dollar.
Investors’ confidence increased due to RBI’s decision
On Friday, RBI announced its monetary policy. For the second consecutive time, the central bank did not make any change in the repo rate and kept it at 5.25 percent.
RBI Governor Sanjay Malhotra said that the Monetary Policy Committee (MPC) has unanimously decided to keep the repo rate stable. This decision has been taken in view of the ongoing tension in West Asia, rising energy prices and supply chain related challenges. Although interest rates were not changed, RBI has given relief in some rules for foreign investors. Due to this, there is a possibility of increase in foreign investment in India, which has a positive effect on the rupee.
Relief to NRI and OCI investors also
RBI has also decided to increase the equity investment limit for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCI). This may further increase the participation of foreign investors in the Indian market. The Governor also clarified that RBI does not work by targeting any particular exchange rate. The central bank’s focus remains only on maintaining market stability and controlling excessive fluctuations.
What is happening in the global market?
Meanwhile, the dollar index, which measures the strength of the US dollar, was trading at 99.40. At the same time, the price of Brent crude oil in the international market increased to $ 95.37 per barrel. Generally, increase in crude oil prices is a matter of concern for importing countries like India as it increases the import bill and may put pressure on the rupee. Nevertheless, the rupee showed strength due to positive signals from RBI.
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