₹ sees best day in 3 yrs, strengthens to 89.29/$

RBI intervened to curb speculative bets, say dealers

- ANJALI KUMARI

The Indian rupee appreciated sharply in the final hour of trade on Friday, supported, according to dealers, by aggressive dollar sales by the Reserve Bank of India (RBI).

The domestic currency posted its strongest single-day gain in over three years, strengthening 1.1 per cent to settle at 89.29 per dollar, compared with 90.26 a dollar in the previous session.

This week, the rupee also recorded its biggest weekly gain in six months, as the RBI stepped in to curb one-sided depreciation against the greenback, dealers said. The rebound comes after the currency hit fresh lows earlier in the week amid persistent capital outflows and an impasse over trade negotiations.

"We could see follow-on dollar selling early next week as positions unwind. With the RBI's willingness to intervene forcefully, the rupee is likely to stabilise near the 89.50 to 90 per dollar range by the end of December. Today's intervention could have been in the range of $3 billion to $5 billion, as such a sharp move is unlikely with smaller volumes," said a market participant.

Market participants said the RBI's move was aimed at flushing out speculative positions and triggering panic among traders who were long on dollars and short on the rupee.