Rupee rises on day 3 as Shanti gains currency

MUMBAI: The rupee advanced for a third straight session against the US dollar on Monday as global crude oil prices fell on expectations that Tehran and Washington are closer than ever to a workable deal on a crucial waterway that evacuates a quarter of the planet’s transportation fuel.

The rupee closed at 95.23 on Monday, the highest in two weeks, against its previous close of 95.69, despite the absence of pronounced central bank interventions, dealers said, which helped undergird the local unit against the greenback in the past two sessions.

On Monday, the rupee traded in the range of 95.45 and 95.10. While oil prices fell more than 5% to $97.8 a barrel, Reuters reported, riskier assets across the Asia Pacific lifted. Indian stock indices rallied with the Nifty 50 returning above 24,000 after nearly three weeks.

Support signal

Reserve Bank of India (RBI) Governor Sanjay Malhotra said in a media interview that while the central bank does not target a specific level for the currency, it is ready to intervene if speculative pressure builds, pointing to the current pace of depreciation in the currency.

“The RBI usually does not comment on the direction of the currency, even if it comments on excessive volatility. This time, however, the governor has clearly spoken on the direction of intervention and wants to control its weakness,” said a trader at a private sector bank.

Governor Malhotra said in a media interview that the pace of depreciation of the rupee made a business case for its support.

“With the recent devaluation, it would be reasonable to think that the rupee is not overvalued. If anything, one could argue that the rupee is undervalued,” Malhotra said. “Let me emphasize – we will do whatever is necessary to ensure orderly price discovery in the forex market,” he said.

After depreciating nearly 11% in FY26, the currency has depreciated by 2.3% in the fiscal year so far – the highest in 14 years.

Rebound?
Many market participants also expect the RBI to announce measures to support the rupee at its June 5 policy meeting, even as markets continue to price in further weakness in the currency.

These measures may include concessional-rate FCNR deposits, relaxation of external commercial borrowing norms, relaxation of hedging requirements for foreign investors and expansion of investment limits for bond investors.

“While such moves may slow the pace of INR depreciation, they continue to see a weaker path to 98 for the currency in the coming weeks, albeit at a less rapid clip than we have seen in the past week,” Barclays said in a note on Monday.