Indian rupee posts strongest week since March on central bank support

MUMBAI: The Indian rupee ended stronger on Friday, with persistent central bank interventions boosting the currency to its strongest weekly gain since March.

The currency rose 0.3% on the day and about 1% week-on-week to end at 95.38 per dollar. On the month, though, it slipped about 0.7% as oil prices climbed due to renewed hostilities in the Middle East.

Brent was on track to rise 21% for the month and WTI 18%, snapping two straight months of declines for both oil benchmarks.

Worries over the impact of oil prices have exerted pressure on the rupee. The currency appeared vulnerable to breaching record lows last week but was shored up by firm central bank intervention last Friday, with the support continuing this week.

Traders in the foreign exchange market have pointed to a pick up in quick, but, aggressive dollar sales by state-run banks, often at times when market liquidity appears to be thinning.

“The intent seems to be to find pockets to push USD/INR lower without using a large amount of firepower,” a trader at a foreign bank said, referring to the quantum of dollar sales.

On Friday, a modest retreat in oil prices also aided the local currency alongside a broadly weaker dollar.

Most Asian currencies firmed on Friday, with traders paying attention to moves in the Japanese yen and Korean won after authorities in both countries stepped in to buy their currencies, possibly with involvement from the United States.

Meanwhile, drawdowns in artificial intelligence linked stocks globally have shored up India’s battered IT stocks with the Nifty IT index rising 16% this month, outpacing the 2% rise in the broader Nifty 50 index.

Later in the day, attention will turn to India’s forex reserves data for the week ended July 24 and the RBI’s end-June forward book figures.