Indian rupee extends rally, putting RBI's dollar-buying threshold in focus

Business Recorder reported that the Indian rupee climbed to 93.70 per dollar on Monday, its strongest level in six months. The move extended a gain of more than 1% last week, while the currency had risen nearly 3.25% over about a month after nearing a record low. Traders are watching whether the Reserve Bank of India will buy dollars to restore reserves and manage its forward-market exposure.

Lower crude prices and renewed foreign investment in Indian equities have supported the currency, while recent RBI measures have eased the mismatch between importer demand for dollars and exporter supply. The central bank’s reserves are $68 billion below their peak, and its net short-dollar forward position reached nearly $240 billion in September. Analysts cited in the report expect stronger dollar inflows to be used to rebuild foreign exchange buffers, limiting the scope for a sharp rupee rise.