Rupee Hits 7-Month High Against US Dollar Amid Foreign Fund Inflows
Why in News?
- The Indian rupee surged to a seven-month high against the US dollar, driven by robust foreign portfolio inflows and positive market sentiment. This appreciation reflects increased investor confidence in India’s economic prospects and the attractiveness of its financial markets.
Important Key Points:
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Foreign Portfolio Inflows: Sustained investments by foreign institutional investors (FIIs) into Indian equities have bolstered the rupee’s strength. The inflows are attributed to India’s stable economic indicators and favorable investment climate.
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Exporter Hedging: Indian exporters have been actively selling dollars to hedge their positions, contributing to the rupee’s appreciation.
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Central Bank Intervention: The Reserve Bank of India (RBI) is believed to have intervened in the forex market by purchasing US dollars through state-run banks to manage the rupee’s rapid rise and maintain export competitiveness.
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Global Market Dynamics: A weakening US dollar index and easing geopolitical tensions have also played a role in strengthening the rupee.
