Mumbai: The rupee strengthened on Friday, helped by central bank intervention in the market, news of a peace deal and ceasefire between Iran and the US, and easing oil price.
The rupee strengthened to 94.95 to the dollar before closing at 95.00, its best day since April 2, according to LSEG data.
Brent futures dropped and were last hovering around $91 per barrel, aiding the local currency.
boost from RBI Support, W Asia peace hopes
The rupee is expected to strengthen further if there are no further escalations in the ceasefire. Dealers expect the rupee to trade in a range of 94.75-95.75 Monday.
"Lower crude prices have eased concerns over India's import bill and provided support to the domestic currency. Technically, the rupee has immediate resistance near 94.60, while 95.30 remains an important support zone in the near term," said Jateen Trivedi, vice-president and currency research analyst at LKP Securities.
Meanwhile, the central bank's net short forward position for April contracted by $8.8 billion to $95.3 billion. The Reserve Bank of India took delivery of positions maturing in the up-to three months tenure.
Of the net short dollar positions, $13.52 billion were in one-month contracts, $10.90 billion were in one-month to three-month contracts and $20.15 billion were in three-month to one-year tenures. The remaining contracts were of more than one year.
When these short positions mature, the RBI will have to sell dollars in exchange for rupee, impacting liquidity. Selling of dollars will also impact RBI's foreign exchange reserves, which were $681 billion as of May 22.
