Historic rise in Rupee, Rupee rises 2% with biggest rise in 12 years; This decision of RBI changed the game

Indian Rupee Surge against US Dollar: Amid the ongoing tension in the Middle East, the Indian rupee witnessed a strong rise against the US dollar on Thursday (April 2). Where the rupee strengthened by 1.4 percent as soon as it opened and reached 93.53 against the dollar. With this, the rupee registered its biggest one-day gain since 2013. Then RBI had taken extraordinary steps to stabilize the rupee. During the afternoon, the Indian currency rose by more than 2 percent to reach 92.8350 against the dollar. Earlier in the last trading session, it had gone to a record low level of 95.21.

Such a sharp rise in the rupee was last seen more than a decade ago in September 2013. RBI’s emergency measures then stabilized the currency and unexpected relief in the Federal Reserve’s tapering program gave support to the rupee. The Indian rupee finally closed at 93.10, up 1.8%.

Reason for rise in rupee against dollar?

RBI has barred banks from offering the most popular means of offshore trading of rupees. This may put pressure on the $149 billion per day market. This step is being considered as a strict measure taken to handle the falling currency. The RBI has imposed some of the strictest measures in a decade to curb speculation and prop up the rupee. This year the rupee has been continuously reaching record low levels and the pressure on it has increased further after the Iran war.

The first step was taken late Friday, when regulators limited banks’ daily onshore currency positions to $100 million. After this decision, banks were forced to close arbitrage deals worth at least $30 billion.

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Indian Rupee rises due to this move of RBI

when even fall of rupee did not subside and it reached new lows, banks were barred from offering certain non-deliverable derivatives contracts. This market is worth an average of $149 billion per day offshore, which is almost double that of the onshore market.