The Indian rupee opened nearly 10 paise higher on Friday as the Reserve Bank of India’s (RBI) deadline for banks to unwind their arbitrage positions approached, while traders also tracked rising crude oil prices amid uncertainty over the US-Iran ceasefire. The Indian rupee gains against dollar in early trade reflect market adjustments to RBI measures and global cues.
The rupee was trading at 92.57 against the US dollar in early trade, compared to its previous close of 92.66.
Indian rupee gains against dollar amid RBI deadline impact
April 10 is the deadline for banks to unwind excessive positions in the offshore non-deliverable forwards (NDF) market.
Earlier in March, the RBI had directed that banks’ net open position in the rupee should not exceed $100 million at the end of each business day. While several banks had sought an extension, the central bank maintained its stance, prompting lenders to unwind arbitrage positions.
According to analysts, the market could remain in a wait-and-watch mode until there is clarity on the RBI’s instructions on overnight position limits. They added that expectations of sharp rupee depreciation following the deadline may be overstated.
Crude oil prices and global market impact
Meanwhile, global crude prices remained on the radar of traders and investors. Brent crude traded at $97 per barrel, an increase of 1.13 per cent from previous close. Similarly, the US WTI crude increased by more than 1 per cent to $99.24 in early trade. However, prices earlier had slipped up to 20 per cent below the $100-per-barrel mark.
On the Multi Commodity Exchange, crude oil futures (April 20) touched an intraday high of Rs 9,222, an increase of 3.23 per cent or Rs 289.
RBI policy stance and forex volatility
Earlier this week, Reserve Bank of India Governor Sanjay Malhotra said the curbs on banks’ foreign exchange positions and restrictions on offering non-deliverable forwards to clients are temporary measures aimed at containing volatility.
He noted that the central bank had observed heightened volatility in the foreign exchange market in recent weeks, partly driven by arbitrage trades by banks.
More News on Indian Rupee:
Indian rupee crosses 93 against US dollar for 1st time
Indian rupee trades over 1 pc higher after US trade deal
Indian rupee rises for 2nd session amid RBI interventions
Rupee gains 50 paise against dollar after RBI relaxes investment norms
