In early trade on Wednesday, the Indian rupee showed signs of strength, appreciating by 2 paise to 83.23 against the U.S. dollar (22.68 against the UAE dirham).
This minor surge was attributed to a weakening American currency and increased foreign investments in the domestic equity markets.
Factors Influencing the Currency Market:
Despite the positive momentum, the rupee’s rise was limited due to escalating crude oil prices and a negative trend in global equity markets.
Forex traders observed that these factors, particularly the surge in oil prices, restrained the Indian rupee from making significant gains.
Crude Oil Price Surge Impact:
The spike in oil prices was notable, especially with the Brent crude contract surpassing $92 per barrel, a surge of almost 9% due to the Israel-Palestine conflict.
This geopolitical tension played a significant role in the volatility of global oil markets.
Influence of U.S. Yields:
Furthermore, the two-year U.S. yield reached a high of 5.25% in New York trading, while the 10-year yield climbed to 4.86%.
This increase followed a higher-than-expected rise in U.S. retail sales last month, affecting the dynamics of the global financial markets.
RBI’s Stance on Rupee Stability:
As per the experts, the Reserve Bank of India (RBI) played a crucial role in stabilizing the Indian rupee amidst global economic fluctuations.
The RBI’s strategic interventions prevented the rupee from falling below the 83.29 mark, considered a record low.
Traders noted that the RBI’s consistent efforts have led to a period of remarkably low volatility in the currency market, reaching levels not seen in nearly two decades.
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