The rupee gained for the eighth straight session on Wednesday, marking its longest winning streak in eight years. It closed at 94.47 per dollar, a six-week high. Dilip Parmar said, "This sustained momentum has been primarily anchored by strategic central bank interventions, healthy foreign capital inflows into the primary market."
The rupee appreciated for the eighth consecutive session on Wednesday to close the day at a six-week high, supported by foreign dollar inflows linked to the Jio Platforms initial public offering (IPO), which opened for public subscription on Wednesday. The eight-day rally marked the rupee's longest one-sided winning streak in nearly eight years, since December 2018.
The domestic unit appreciated by 2.45 per cent over the last eight sessions.
The rupee settled at 94.47 per dollar, its strongest level since June 25, against the previous close of 94.93 per dollar.
The recovery has been supported by a series of measures announced by the Reserve Bank of India (RBI) last week to curb dollar demand in the spot market, alongside dollar sales and foreign capital inflows.
"The Indian rupee registered its eighth consecutive session of gains. This sustained momentum has been primarily anchored by strategic central bank interventions, healthy foreign capital inflows into the primary market, and profit-taking in the broader US dollar," said Dilip Parmar, research analyst at HDFC Securities.
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"On the technical front, the spot dollar-rupee pair has support at 94.27 per dollar, while resistance is pegged at 95.15 per dollar," Parmar said.
The rise in crude oil prices capped some gains for the local currency, dealers said.
Brent crude rose more than 1 per cent to around $110 per barrel on Wednesday as escalating tensions in the Middle East fuelled concerns over potential supply disruptions.
The RBI's recent measures include steps to redirect oil-related dollar demand away from the spot market and raise the cost of certain importer hedges. The central bank's interventions have reinforced the impact of these measures, while foreign inflows have provided additional support to the rupee.
Despite the recent recovery, analysts expect the currency to face pressure over the medium term because of India's current account deficit, higher inflation relative to peers and the RBI's sizeable net short position in the foreign exchange forward market.
"The rupee closed at 94.46 per dollar, after touching an intraday high of 94.82 per dollar, indicating a notable recovery in the rupee from its weakest level during the session. The reversal suggests that dollar selling emerged at higher levels, potentially reflecting exporter dollar supplies and intervention by the RBI to curb excessive volatility," said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.
The Indian unit has gained 1.44 per cent so far in October and 0.36 per cent in the financial year so far.