Indian Rupee Rebounds After Hitting 91 Against USD; BoJ Rate Hike Boosts Market Sentiment
Indian Rupee rebounds to 89.59 vs USD after hitting record low; BoJ rate hike and RBI interventions boost market sentiment and investor confidence.
Indian Rupee gains against US Dollar as BoJ hikes interest rates, supporting forex reserves and stabilizing stock markets.
The Indian Rupee (INR) made a remarkable comeback after recording a low of 91.07 against the US Dollar (USD), with its closing rate being 89.59 on Friday. The currency gained over 1.6% compared to its latest lows, thereby indicating the third day of surging prices in a row.
The specialists have pointed the finger at the Reserve Bank of India (RBI) who, by selling USD, created the demand and at the same time the Bank of Japan (BoJ) who, by the rate hike, was expanding their monetary policy. The BoJ move has put pressure on the US Dollar, potentially halting foreign institutional investors’ (FIIs) net selling in Indian equity markets.
BoJ Rate Hike: A ‘Santa Claus’ for INR?
Avinash Gorakshkar, SEBI-registered equity expert, explained, “Japan’s interest rate increase is historic. It may curb the US Dollar’s strength, causing FIIs to pause their selling in India. This could reduce RBI interventions in the forex market.”
Anuj Gupta, Director at Ya Wealth, added, “If FIIs pause selling, the INR could strengthen further, supporting India’s USD reserves. The Rupee’s recent 6% year-to-date drop has lowered reserves needed for essential imports like crude oil. The INR could soon test 89 or even 88.70 against the USD.”
Impact on Indian Stock Market
Seema Srivastava, Senior Research Analyst at SMC Global Securities, said that while Japan’s rate hike represents a global shift away from ultra-easy monetary policy, its effect on Indian equities will be gradual. “India’s markets remain stable thanks to robust FX reserves, manageable current accounts, and steady commodity prices. Inflation and corporate input costs are under control, supporting investor confidence,” she noted.
Domestically, India's robust GDP performance, and increasing private and public capital investments, along with the good conditions of the banks' balance sheets and the entire financial, infrastructure, and manufacturing sectors' earnings very clearly, are still the factors that make the market stable.
Nifty 50 Rebounds
On the domestic indices, Nifty 50 recovered from recent 52-DEMA support levels. According to Seema Srivastava, “The next leg of the market rally is expected to be earnings-led rather than liquidity-driven. Stability in global conditions and consistent domestic earnings will determine the sustainability of this rebound.”
