MUMBAI: The rupee strengthened sharply on Monday, closing at 95.91 against the US dollar, up 66 paise from its previous close, after RBI governor Sanjay Malhotra signalled that the domestic currency was undervalued and highlighted robust foreign currency inflows.The central bank’s supportive messaging, coupled with market intervention, helped the rupee gain as much as 76 paise intraday. Dealers said RBI was seen intervening through public sector banks in both spot and forward markets, amplifying the currency’s rally.The rupee also drew strength from a sharp decline in global crude prices, with Brent falling about 10% in early trade to below $88 per barrel amid easing geopolitical tensions.
The central bank’s supportive messaging, coupled with market intervention, helped the rupee gain as much as 76 paise intraday
In an interview to Business Line, Malhotra said, “I would also like to reiterate that it would be reasonable to think that the rupee is not overvalued. If anything, one could argue that the rupee has become undervalued, both in nominal and in REER (real effective exchange rate) terms.” On foreign inflows, he said, “Till date, banks have mobilised almost $32 billion. Obviously, most of it is coming through FCNR (B) deposits.“Meanwhile, the stock markets snapped their losing streak, with the sensex jumping 776 points to settle at 76,836. Nifty surged 229 points to end at 23,996.
