Rupee logs biggest one-day gain in three weeks; ends 13 paise higher at 83.12 against the US dollar

The Indian rupee ended 13 paise higher against the US dollar on Friday, logging its biggest one-day gain in three weeks, helped by likely central bank intervention. The local currency ended at 83.12 a dollar as compared to previous close of 83.25, to log its best one-day gain since September 29.

For the week, the rupee appreciated 0.2% and recorded its biggest weekly advance in two months.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.05% to 106.20. The 10-year US Treasury yield was at 4.94% after hitting 5% late in the US session, the highest since 2007.

Experts attributed the sharp gain in the rupee to RBI's move as well as some softening in the greenback.

“It is worth highlighting that RBI's intervention, particularly at 83.25, played a significant role in supporting the rupee. Additionally, the rupee benefited from a period of weakness in the dollar index,” said Jateen Trivedi, VP Research Analyst at LKP Securities.

Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the dollar declined after US Federal Reserve Chair Jerome Powell on Thursday cautioned of a possibility of additional rate hikes, if warranted, on resilient economy and a tight labour market.

However, Powell's remark that a surge in bond yields helped tighten the financial conditions led to expectations that the central bank may not hike rates for now.

“We expect rupee to trade with a slight negative bias as escalating tensions between Hamas and Israel may continue to deteriorate global risk sentiments. US Dollar may bounce back as safe-haven demand may come into play and crude oil prices may rise further on concerns over supplies,” Chaudhary said.

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Meanwhile, crude oil prices surged, limiting gains in the domestic currency.

Brent crude rose 1.27% to $93.55 a barrel, while US West Texas Intermediate crude rallied 1.45% to $90.67 a barrel.

On the domestic front, the Indian equity market ended lower for the third consecutive session on Friday as soaring US Treasury yields, concerns about potential interest rate hikes by the US Fed, and the ongoing Israel-Hamas war kept investors on edge.

The 30-share BSE Sensex closed 231.62 points, or 0.35%, lower at 65,397.62, while the broader NSE Nifty settled 82.05 points, or 0.42%, lower at 19,542.65.

On Thursday, the Foreign institutional investors (FIIs) net sold Indian shares worth ₹1,093.47 crore, while Domestic Institutional Investors (DIIs) net purchased shares to the tune of ₹736.15 crore, as per provisional data available on the exchanges.

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(With inputs from PTI)

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