Rupee Opens 10 Paise Higher Against Dollar at 93 Amid Arbitrage Unwinding

Rupee Strengthens as Traders Unwind Speculative Positions

The Indian rupee opened 10 paise higher on April 6, continuing the trend of unwinding speculative positions in the offshore non-deliverable forwards (NDF) market. This move is largely attributed to the Reserve Bank of India's (RBI) efforts to temper volatility in the currency. The rupee was trading at 93 to a dollar, following a close at 93.10 in the previous session.

The currency and fixed income markets were closed on April 3, in observance of Good Friday. However, the RBI's actions have had a significant impact on the market, with banks unwinding their arbitrage positions in response to the central bank's directives. These directives, which aim to curb excessive speculation in the offshore market, are the strictest in over a decade.

As a result of the RBI's efforts, the rupee has gained around 2 percent in the last week. This gain is expected to continue, with some market analysts predicting a strengthening of the rupee toward the Rs 91.50–92.00 range. However, global risks, such as the ongoing tensions in the Strait of Hormuz, cannot be ignored.

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The bi-monthly monetary policy committee (MPC) review, which begins later in the day, will also be closely watched by traders. The rate-setting panel is expected to hold rates when it announces the outcome on April 8. Meanwhile, globally, market participants will be tracking Brent crude prices, which were trading around $110 a barrel, rising nearly 1 percent from the previous session.