New Delhi, April 2: The Indian Rupee strengthened significantly on Thursday, marking its largest single-day gain in over 12 years. This surge is primarily attributed to the Reserve Bank of India’s (RBI) intensified measures against currency speculation, following tightened restrictions on local currency positions by banks.
After a three-day holiday, trading resumed with the Rupee appreciating by up to 1.7% against the US Dollar, reaching 93.25. This is the most substantial increase since September 2013.
This rise occurred amidst a backdrop of weakening currencies across most Asian nations. Meanwhile, former President Donald Trump indicated rising tensions in West Asia, contributing to pressure in global markets.
In the commodity market, crude oil prices saw a significant spike. Brent crude surged by 5.24%, reaching $106.47 per barrel, while US WTI crude climbed by 4.5% to $104.64 per barrel.
Asian stock markets also experienced declines, with the Nikkei, Hang Seng, and KOSPI dropping by up to 3%.
The domestic stock market opened weakly, with the Sensex and Nifty falling by up to 2% in early trading.
The currency market had been closed since Monday. It remained shut on March 31 for Mahavir Jayanti, April 1 for the start of the new financial year, and will also be closed on April 3 for Good Friday.
The RBI has prohibited banks from offering non-deliverable forward (NDF) contracts linked to the Rupee. Additionally, companies are not allowed to rebook canceled forward contracts.
Previously, the RBI had set a limit of $100 million on banks’ net open Rupee positions. Furthermore, banks have been restricted from entering into foreign exchange (FX) derivative contracts with their respective parties.
According to reports, India holds over $700 billion in foreign exchange reserves, which is deemed sufficient to curb speculation and stabilize the Rupee when necessary.
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