RBI shield lifts rupee, but oil and dollar bite back

The rupee gained 14 paise to close at 93.04 (provisional) against the US dollar on Monday, following the Reserve Bank’s initiatives designed to curb speculative fervour and dampen volatility in the rupee. Forex traders said that though the RBI measures are rupee-positive, unabated withdrawal of foreign capital, a strengthening dollar, and rising crude oil prices amid a volatile geopolitical situation continue to put pressure on the rupee.

The RBI tightened its rules to curb speculative positions and capped banks’ net open positions at USD 100 million. At the interbank foreign exchange, the rupee opened at 93.13 against the US dollar and in intraday trade gained momentum to touch a high of 92.79 against the greenback. At the end of Monday’s trading session, the rupee was quoted at 93.04 (provisional), up 14 paise from its previous closing price.

On Thursday, the rupee logged one of its steepest single-day gains in many years and settled 152 paise higher at 93.18 against the US dollar after the Reserve Bank stepped in with a slew of measures to restrict banks from onshore forward markets. Equity and forex markets remained closed on Friday due to Good Friday. Global tensions are keeping the rupee under pressure.

US President Donald Trump has escalated tensions with Iran, giving a deadline until Tuesday to reopen the Strait of Hormuz and warning that failure to comply could lead to attacks on its power infrastructure.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.15 per cent lower at 99.87. Brent crude, the global oil benchmark, was trading at USD 107.29 per barrel, down 1.61 per cent, in futures trade, as investors focused on Trump’s deadline to reopen the Straight of Hormuz.