Rupee extends winning streak, rises to 94.96 against dollar as RBI tightens forex rules

Rupee extended its winning streak on Tuesday, strengthening to 94.96 against the US dollar. The currency opened at 95.53 in the interbank market and rose 82 paise or 0.7% from its previous close. The latest gains come after rupee's sharp rally on Monday, when it rose 93 paise to close at 95.78 against the dollar, clocking its biggest single-day gain in more than six months.The currency's recovery is attributed to a series of steps taken by the Reserve Bank of India (RBI) to ease immediate dollar demand and restrict excessive positions in the foreign exchange market. Forex traders expect these measures to reduce demand for dollars in the spot market and limit speculative bets against the rupee.Among the steps announced by the central bank are a dedicated dollar window for oil marketing companies through designated banks and higher costs for certain foreign exchange hedging transactions."With the RBI's measures supporting the rupee, we expect USD/INR to move towards 95.00–94.80 range in the near term," CR Forex Advisors MD Amit Pabari told PTI.RBI moves, Dalal Street and more in focusThe central bank announced tighter rules for foreign exchange derivatives on Saturday as part of its efforts to curb speculative positions against rupee. Banks have also been asked to set aside a 20% reserve for dollar purchases exceeding $2 million.Separately, the RBI directed authorised dealers (AD) not to allow users to rebook cancelled foreign exchange derivative contracts involving the rupee. The restriction applies to both deliverable and non-deliverable contracts.The dollar index, which tracks the greenback against a basket of six currencies, slipped 0.15% to 102.43.Oil prices also moved lower, with Brent crude futures, the global oil benchmark, falling 1.11% to $105.47 per barrel.Alongside a stronger rupee, Dalal Street was also trading higher on Tuesday. BSE Sensex gained over 600 points to reach 72,584.50, while NSE Nifty advanced 200 points to 22,575.30.Foreign institutional investors, however, continued to sell equities. According to exchange data, FIIs were net sellers to the tune of Rs 1,708.48 crore on Monday.Separately, government data released on Monday showed that retail inflation rose sharply to 5.54% in September, largely on account of higher onion and other food prices. The increase, however, kept inflation within the RBI's tolerance band.You use AI every day. Now get your AI Quotient. Take the AIQ test.