This marked the third consecutive day of appreciation, rebounding from the all-time low of 91.08 seen on Tuesday. This is also the strongest closing level since November 26.
Possible intervention by the central bank helped the currency rise sharply in late trade on Friday, market watchers said. Earlier, the rupee was trading between 89.95 and 90.30. It opened at 90.13 against a close of 90.24 per dollar on Thursday.
“The rupee closed strong at 89.27 with a possible intervention by the RBI just five minutes before the market closed. Being a very thin market before the end of the year, any small volume creates volatility in the currency market, which happened exactly between 3.25 to 3.30 pm today,” said KN Dey.
He added that this is a good time for importers to cover their payments.
Meanwhile the one-year forward premium rose to 2.84%, the highest since October 2022 due to higher hedging demand.
“The sharp appreciation (in the spot market) pushed the rupee to the top of the Asian currency rankings, driven by strong corporate dollar inflows and a clear shift towards risk-on sentiment,” said Nandish Shah, deputy vice president, HDFC Securities.
There was a net inflow of $194 million on Friday, according to NSDL data. Overall in December so far, foreign portfolio investors have net sold $10.145 billion in Indian markets.
The central bank has intervened decisively in the market over the past three days and helped the struggling currency bounce back.
“With the RBI likely to engage in active intervention, the short-term outlook for the USDINR has turned bearish,” he said.
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