There has been a tremendous rise in the rupee against the dollar.
Crude oil prices turned the tables in such a way that the rupee witnessed a rise of 61 paise in one go. Yes, there was a decline of more than 10 percent in the prices of crude oil in the international market. The effect of which was seen in the rise of rupee against dollar. On Wednesday, the rupee strengthened by 61 paise and closed at 94.57 (provisional) against the US dollar. The reason for this was that US President Donald Trump hinted at a possible agreement with Iran, after which the prices of Brent crude fell from its high levels to around $ 100 per barrel.
Forex traders said that in view of the huge pressure on the Indian rupee, the Reserve Bank of India (RBI) is also actively adopting an “indirect” strategy to support the currency. Apart from this, market sentiment also strengthened after Trump stopped “Project Freedom”. “Project Freedom” was an American operation, the purpose of which was to provide security to ships passing through the Strait of Hormuz. Let us also tell you how the rupee has seen a rise against the dollar.
Tremendous rise in rupee
At the interbank foreign exchange market, the rupee opened at 95 against the US dollar, then declined and touched the day's low of 95.18. Finally, the rupee closed at 94.57 (provisional), registering an increase of 61 paise over its previous closing level. On Tuesday, the rupee closed at 95.18 against the US dollar. Earlier, due to renewed clashes in the Gulf region and targeting of UAE infrastructure, investors had distanced themselves from risky assets, which again increased concerns about the supply chain. In this situation, the rupee improved after the possible intervention of RBI, whereas in the day's trading it had reached an all-time low of 95.44.
Why did the rupee rise?
According to Amit Pabari, MD of CR Forex Advisors, the Reserve Bank of India is considering ways to support the currency without directly using its forex reserves. Pabari further said that one of the ideas being discussed is to encourage public sector banks to raise funds through foreign currency bonds. This can help in bringing the flow of new dollars into the system. President Trump has suspended “Project Freedom” which provides security to ships in the Strait of Hormuz. He has claimed that progress has been made in talks towards an agreement to end the war with Iran. In a post on 'Truth Social' on Tuesday, Trump said that considerable progress has been made with representatives of Iran towards a full and final agreement.
What is Trump's Project Freedom?
“Project Freedom” was launched on Monday to safely rescue ships stranded due to the closure of the Strait of Hormuz. Trump had announced this operation on Sunday, and the US Central Command started implementing it the very next day. Pabari said that there was some softening in the global environment, but there was no complete feeling of relief. US President Donald Trump announced that 'Project Freedom' would be temporarily halted to allow room for a possible agreement. This has reduced the extreme uncertainty spread in the markets to some extent.
Fall in dollar and crude oil
- Meanwhile, the dollar index, which measures the dollar's strength against a basket of six currencies, was trading at 97.79, showing a decline of 0.66 per cent.
- Global oil benchmark Brent crude was trading at US $ 100.81 per barrel, down 8.25 percent in futures trade.
- On the domestic stock market front, Sensex jumped 940.73 points to close at 77,958.52, while Nifty rose 298.15 points to 24,330.95.
- According to exchange data, foreign institutional investors sold shares worth Rs 3,621.58 crore on Tuesday.
- Meanwhile, India's services sector growth hit a five-month high of 58.8 in April, with new orders and output expanding rapidly, according to a monthly survey released on Wednesday.
- The survey revealed that amid the West Asia crisis, companies have shifted from international suppliers to domestic suppliers.
- The seasonally adjusted HSBC India Services PMI business activity index rose to 58.8 in April from 57.5 in March, marking the strongest rate of expansion since last November.
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