Indian Rupee Reaches 95.25 Against US Dollar, Closing 35 Paise Higher

Indian Rupee Continues to Gain Against US Dollar

The Indian rupee continued its winning streak, appreciating 35 paise to close at 95.25 (provisional) against the US dollar on Monday, marking its third consecutive session of gains. The rupee's appreciation comes on the optimism that the US and Iran are nearing a peace deal, despite remaining at odds over key issues such as blockades on the Strait of Hormuz.

The rupee's gains can be attributed to the statement made by RBI Governor Sanjay Malhotra, who assured that the central bank will take necessary measures to ensure orderly price discovery in the forex market. This statement has instilled confidence in the market, leading to a positive trading session for the rupee.

The rupee's recent performance has also raised questions about its valuation. RBI Governor Sanjay Malhotra stated in an interview with Mint that the Indian rupee is not overvalued and may, in fact, be undervalued after its recent depreciation. This statement suggests that the rupee may have more room for growth in the coming days.

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The interbank foreign exchange market saw the rupee open at 95.36 against the US dollar, touching an intraday high of 95.12 and a low of 95.44 during the trade. At the end of Monday's trading session, the rupee was quoted at 95.25 (provisional), higher by 35 paise from its previous close.

The rupee's gains can also be attributed to the positive sentiment in the global market. US President Donald Trump stated that the US and Iran have "largely negotiated" a peace pact to end the nearly three-month war, and US Secretary of State Marco Rubio announced that the US and India are on the verge of finalising an interim trade agreement.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.98, down 0.26 per cent. Brent crude, the global oil benchmark, was trading down 5.10 per cent at USD 98.26 per barrel in futures trade.

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On the domestic equity market front, Sensex jumped 1,073.61 points to settle at 76,488.96, while the Nifty surged 312.40 points to 24,031.70. However, foreign institutional investors offloaded equities worth Rs 4,440.47 crore on a net basis on Friday, according to exchange data.

The country's forex reserves dropped USD 8.094 billion to USD 688.894 billion during the week ended May 15, the Reserve Bank of India (RBI) said on Friday. In the preceding week ending May 8, the overall reserves had jumped by USD 6.295 billion to USD 696.988 billion.