Indian Rupee: Indian Rupee strengthened rapidly in early trade on Thursday (February 12), after weakening the previous day, it increased by 38 paise to reach 90.40 per US dollar. This change reflects local liquidity conditions, foreign fund inflows and relatively stable global cues rather than any single major change.
what happened today?
The rupee opened weak at 90.55 but strengthened sharply to 90.40 against the dollar in morning trade. This was in contrast to Wednesday (February 11), when the currency had fallen 22 paise to close at 90.78. Traders attributed the rise mainly to two domestic factors – continued foreign portfolio inflows into equities and ample liquidity of the rupee in the banking system.
Why did the rupee strengthen? What are the reasons?
- Got support from foreign inflow
Foreign institutional investors (FIIs) bought Indian equities worth ₹943.81 crore on Wednesday (February 11). Although the inflow was not much, traders said that continuous buying provided psychological support to the rupee and some dollars were sold in early trade.
- RBI’s liquidity stance mattered more than headlines
Market participants pointed to the calm but effective liquidity management of the Reserve Bank of India. According to Amit Pabari, MD, CR Forex Advisors, the banking system’s surplus liquidity stood at about ₹3 trillion, the highest in six months. This provided a lot of cash to the banks and reduced the stress in the money market. This environment is generally good for a stable rupee.
- Global signals remained calm
Asian currencies were mixed and range-bound after stronger-than-expected US jobs data for January. Although the payroll numbers initially boosted US Treasury yields and the dollar, analysts cautioned that the data could be volatile and may not indicate a sustained improvement in the labor market. The dollar index was slightly down at 96.78, which shows that there was no major rise in the dollar which could put pressure on the rupee. With global activity slowing down, local factors took the lead in determining the direction of the rupee.
- What risks remain for the rupee?
Despite Thursday’s (February 12) gains, traders highlighted several ongoing difficulties.
Crude Oil Prices: Brent crude hovered around $69.69 per barrel, still enough to keep India’s import bill high—a persistent negative for the rupee.
Geopolitical Tension: Unresolved global disputes continued to reduce risk appetite.
US-India Trade Uncertainty: Markets remained cautious after changes to the White House fact sheet on the trade deal, which detailed possible tariff cuts by India on US goods and agricultural products.
Constant demand for dollars: Importers and corporates kept buying dollars in the background.
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