The rupee gained 16 paise to open at ₹95 against the US dollar, as persistent intervention by the central bank and favourable near-term momentum helped offset pressure from rising US Treasury yields and higher oil prices.
The rupee rose 0.2% on Monday to a near four-week high, surprising most market participants.
A currency trader at a bank said that flow- and position-related dollar selling pushed the rupee towards the stronger end of its expected near-term range of ₹95.00– ₹95.80 per US dollar. The move was “definitely not expected”, particularly with oil prices around $90 a barrel, the trader said, according to a Reuters report.
The trader added that the rupee could extend its gains at the open, supported by the current momentum. However, momentum-driven moves have generally failed to sustain in the past, he cautioned. Importers are also likely to increase their hedging activity at current levels, he said.
India’s robust GDP numbers are also supportive for the rupee, although their impact is likely to remain marginal, the trader said, according to the Reuters report.
