The Indian rupee continued its upward trend against the US dollar, reaching an intraday high of 94.75 per dollar on Wednesday. This strength was driven by the Reserve Bank of India's (RBI) efforts to curb speculation and reduce volatility in the forex market. The rupee closed 13 paise stronger at 95.15 per dollar, marking a near one-month high.
Amit Pabari, MD of CR Forex Advisors, highlighted that the RBI's measures have significantly boosted the rupee. He noted that Finance Minister Nirmala Sitharaman's openness to discussing LTCG tax and STT, along with RBI Governor Sanjay Malhotra's clarification that the curbs target speculation, not capital flows, indicate a coordinated effort to support equity markets and strengthen the rupee.
Dilip Parmar, Senior Research Analyst at HDFC Securities, observed that the rupee's upward trajectory was supported by central bank interventions and the unwinding of long dollar positions. However, strong importer demand limited further gains. Market participants are cautious ahead of the upcoming US inflation figures, with the spot dollar/rupee expected to trade within a range of 94.70 to 95.50.
Meanwhile, Government Securities yields rose, tracking higher crude oil prices amid increased attacks by Yemen-based Houthi rebels on Saudi Arabia's energy infrastructure. The yield of the benchmark 10-year Government Security (6.94 per cent 2036 GS) rose to 7.41 per cent before closing at 7.40 per cent. India's WPI inflation surged to 11.39 per cent year-on-year in September, driven by higher prices of fuel, power, food articles, and manufactured products.