Rupee stages strong comeback from record low, up 128 paise in early trade

The rupee recovered sharply by 128 paise from its all-time low to trade at 93.57 against the US dollar in early trade on Monday, after the Reserve Bank of India (RBI) tightened norms on banks’ overnight foreign exchange positions. 

At the interbank foreign exchange market, the domestic currency opened stronger at 93.62 and gained further ground to 93.57, marking a significant recovery from Friday’s record closing low of 94.85, when it had slumped 89 paise. 

The rebound comes after the RBI, through a circular dated March 27, capped the Net Open Position (NOP-INR) for banks at $100 million, with compliance mandated by April 10. The move is expected to force banks, typically holding long dollar positions, to pare exposures in the onshore currency market, lending support to the rupee. 

Forex traders said the directive has prompted position unwinding, aiding the rupee’s early gains. However, they cautioned that external pressures continue to weigh on the currency. 

The dollar index, which measures the greenback against a basket of six currencies, remained firm above the 100-mark, trading marginally lower by 0.06% at 100.09. Elevated crude oil prices also limited the rupee’s upside.

Brent crude up over 2% in futures trade

Brent crude, the global oil benchmark, was trading around $115 per barrel, up over 2% in futures trade, amid rising supply concerns. Prices firmed in the Asian session after Yemen’s Houthi rebels escalated the conflict by launching missile attacks on Israel over the weekend. 

Meanwhile, U.S. President Donald Trump signalled the possibility of seizing Iran’s Kharg Island while also indicating that a ceasefire could materialise quickly, adding to market volatility. 

Benchmark indices remain under pressure

On the domestic equity front, benchmark indices were under pressure. The Sensex fell 1,191.24 points to 72,391.98 in early trade, while the Nifty declined 349.45 points to 22,470.15, dragged by banking and financial stocks. 

Broader markets also remained weak, with the Nifty MidCap and Nifty SmallCap indices down 1.95% and 2.05%, respectively. Sectorwise, Nifty Bank and Nifty PSU Bank emerged as the biggest laggards, while Nifty Metal showed relative outperformance. 

Foreign institutional investors (FIIs) were net sellers, offloading equities worth ₹4,367.30 crore on Friday, according to exchange data.