The Indian rupee recorded its sharpest one-day rise in nearly four months on Wednesday, supported by central bank intervention and the unwinding of short positions. The currency closed at 88.0750 per US$, up 0.8% for the day, its best performance since June 25.
The rupee briefly reached 87.9250 in early trading after the Reserve Bank of India intervened in both local spot and non-deliverable forward markets to stabilise the exchange rate.
Traders said the move eased pressure on the currency, which had been hovering near its record low of 88.80 amid concerns over higher U.S. trade tariffs, weak portfolio inflows, and rising precious metal prices.
"The market was a bit unfair in testing the central bank's patience at these levels because nothing in the underlying balance of payments had changed to warrant this kind of weakening so far," said Dhiraj Nim, economist and FX strategist at ANZ.
India's balance of payments showed a US$4.5 billion surplus for April–June, compared with US$5.2 billion a year earlier. Meanwhile, September data showed the country's merchandise trade deficit widened to an 11-month high of US$32.15 billion, exceeding economists' expectations.
India's trade negotiation team is currently in Washington for discussions with U.S. officials.
The U.S. dollar index slipped 0.2% to 98.8 after remarks from Federal Reserve Chair Jerome Powell reinforced expectations of upcoming interest rate cuts.
Source: Reuters
