Due to sharp fall in the prices of crude oil in the international market and reduction in tension between America and Iran in West Asia, the rupee gained a strong gain of 61 paise at 95.92 per dollar on Monday. Experts believe that the strength in the domestic stock market and weakness in the dollar against major global currencies also supported the rupee.
The rupee opened at the level of 96.18 in the interbank foreign exchange market. During trading it went as low as 96.27, while also touched a high of 95.78. Finally the rupee closed at 95.92 per dollar. Earlier on Friday, the rupee had closed at 96.53 per dollar. That means, the Indian currency gained 61 paise in a single trading day.
Why did the rupee strengthen?
According to experts, the recent reduction in tension between America and Iran has created an atmosphere of relief in the global market. This led to a big fall in the prices of crude oil. Apart from this, the dollar index also fell by about 0.20% to 101.09. This means that the dollar weakened against the major currencies of the world, which benefited the rupee. Experts also say that the expectation of possible intervention by the Reserve Bank of India (RBI) also helped in keeping the rupee strong.
Crude oil became cheaper
A huge decline of about 9% was recorded in the price of Brent crude oil in the global market. After this its price reached $88.12 per barrel. India buys most of its crude oil needs from abroad. Therefore, when oil becomes cheaper, the country’s import expenditure decreases and its positive effect is seen on the rupee.
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