Mumbai
The Indian rupee has strengthened against the dollar and reached above Rs 86. This is his best performance of any one week in the last two years. Factors have strengthened the rupee such as stability in oil prices, the decline in the dollar index, and intervention in the foreign exchange market by the Reserve Bank of India (RBI). This week, the rupee gained 1.2 per cent, which is the highest since January 2023.
Experts say that the rupee is continuously strengthening due to increasing liquidity of dollars (liquidity) by RBI and regular intervention. Apart from this, foreign investment, stability in oil prices, decrease in domestic inflation, and improvement in trade deficit (trade deficit) have also given up the rupee. India’s trade deficit declined to $ 14.05 billion (about 1.17 lakh crore rupees) in February, which was 23 billion dollars (about 1.91 lakh crore rupees) in January. This improvement is due to a decline in exports and imports.
The main reason for the strength of the rupee
RBI intervention: RBI increased the liquidity of the dollar through dollars/rupee swap auction. Swap auction means that RBI bought dollars from banks and promised to sell them back in future.
Stability in oil prices: India’s import bill was reduced due to oil prices being stable, which gave support to the rupee.
Foreign Investment: Foreign investors invested money in Indian markets, increasing the supply of dollars.
Trade deficit improvement: Trade deficit reduced to $ 14.05 billion in February, the lowest since August 2021.
Experts believe that RBI’s correct and time policies have increased the trust of investors. Due to this, the strength of the rupee can continue. However, factors such as fluctuations in global markets and changes in oil prices can affect the rupee.
Which sectors benefit from the strong rupee
Many sectors will benefit from the strength of the rupee, especially the industry depending on imports. When the rupee is strong, the goods imported like crude oil, electronics, and machinery become cheaper. This reduces the cost of petroleum, automobile, and electronics industry.
Also, those traveling foreign travel will also benefit, because their purchasing capacity increases against the dollar. However, exporters may suffer losses, as their products become expensive abroad due to strong rupees. Especially IT companies have problems with the weakening of the dollar and the strengthening of the rupee.
Impact of foreign investment on market
On Thursday, foreign institutional investors (FIIS) made a net purchase of Rs 3,239.14 crore in the Indian stock market. Apart from this, an investment of Rs 5,500 crore was also seen in the Indian bond market. According to experts, due to India’s real yield 3.028%, foreign investors are considering investment here as attractive.
Dollar index and crude oil gains
The dollar index, which reflects the US dollar position against six major currencies, rose by 0.13% at 103.98. Brent Crude was trading at $ 72.32 per barrel in futures trading at $ 72.32 per barrel.
Strong strengthening in the stock market
Domestic stock markets are also doing positive business. In the afternoon trading, BSE Sensex (Sensex) was trading at 76,929.40 with a gain of 581.34 points or 0.76% in the afternoon trading at 76,929.40. NIFTY 50 also gained 165.10 points or 0.71% to 23,355.75.
Foreign investors have confidence in Indian market
The strength of the rupee reflects the increasing confidence of foreign investors towards the Indian market. In the coming days, global markets fluctuations, oil prices and dollar index will decide the direction of the rupee. At the same time, the decisions of the Federal Reserve and the fluctuations in international markets can affect the speed of the rupee.
