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Rupee Soars 1.7% in Biggest Single-Day Gain in Over 12 Years

The Indian rupee surged 1.7% to 93.25 against the dollar, marking its biggest single-day gain in over 12 years. The rally followed a three-day market holiday and came despite regional currency weakness and rising crude oil prices. The Reserve Bank of India intensified its crackdown on speculation by extending curbs to offshore rupee derivatives and tightening limits on banks' foreign exchange positions. Analysts note that India's substantial foreign exchange reserves provide a buffer to deter speculative moves and allow for intervention.

Key Points: Rupee Posts Biggest Gain in 12 Years as RBI Cracks Down

  • Rupee's sharpest rise since 2013
  • RBI extends curbs to offshore derivatives
  • Limits on banks' FX positions tightened
  • Markets closed for holiday break
  • Forex reserves seen as a stabilising buffer
2 min read

Rupee posts biggest single-day gain in 12 years as RBI tightens speculation curbs

The Indian rupee surged 1.7% against the dollar after the RBI extended curbs on currency speculation to offshore markets and tightened bank limits.

"The Indian rupee posted its biggest single-day gain in more than 12 years - Report"

New Delhi, April 2

The Indian rupee posted its biggest single-day gain in more than 12 years on Thursday as authorities intensified their crackdown on currency speculation by extending curbs to offshore derivatives markets, days after tightening limits on banks' local positions.

The currency strengthened as much as 1.7 per cent to 93.25 against the dollar -- its sharpest rise since September 2013 -- as trading resumed after a three-day holiday break.

The rally came despite broad weakness across most regional currencies, as US President Donald Trump signalled a further escalation of tensions in West Asia.

On the commodities front, global crude prices surged. Brent crude futures traded at $106.47 per barrel, up 5.24 per cent, while US WTI futures rose 4.5 per cent to $104.64.

Asian stock markets also came under pressure, with major indices trading in negative territory. The Nikkei, Hang Seng, and KOSPI fell up to 3 per cent.

Domestic markets opened lower, with headline indices Sensex and Nifty falling up to 2 per cent in early trade.

The currency markets had remained closed since Monday, on account of Mahavir Jayanti on March 31, the start of the new fiscal year on April 1, and will shut on Good Friday on April 3.

The Reserve Bank of India has barred banks from offering rupee non-deliverable forwards to resident and non-resident clients. The central bank also said companies cannot rebook cancelled forward contracts.

Earlier in the week, the central bank also put a limit of $100 million on net open rupee positions of banks. It also prohibited banks from undertaking FX derivative contracts with related parties.

Moreover, India's foreign exchange reserves of over $700 billion are large enough to deter speculative moves and allow the RBI to intervene to stabilise the rupee, a report said.

- IANS

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Reader Comments

P
Priya S
Great news for importers and those with foreign education loans! But I'm a bit worried this is a short-term fix. The stock markets are down and global tensions are high. The real test will be if the rupee holds these gains over the next few weeks.
R
Rohit P
The timing with the holidays and new fiscal year start is interesting. Shows the RBI was planning this move. Our $700 billion+ forex reserve is our real shield. Makes me proud that we have this buffer when so many other economies are struggling.
S
Sarah B
As an NRI, these curbs on non-deliverable forwards for non-residents are a significant change. It limits hedging options. While I understand the need to stabilize the rupee, I hope there's a balanced approach that doesn't overly inconvenience genuine investors abroad.
V
Vikram M
Biggest gain in 12 years is headline-grabbing, but let's be realistic. The gain is against a very weak backdrop in equity markets. Exporters will be unhappy. The RBI's job is to manage volatility, not pick a strong or weak side. Hope they keep that focus.
K
Kavya N
This is a relief! Petrol prices are already through the roof. If the rupee strengthens, it might help moderate the price rise a little bit when the oil marketing companies revise rates next. Fingers crossed! 🤞

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