Indian Rupee Rises Against Dollar: Will RBI’s Policy Boost It Further?

Indian Rupee Gains Slightly Against Dollar; RBI Meeting in Focus

Key Highlights:

• Rupee Gains: Indian Rupee strengthens by 3 paise against the US Dollar, closing at 87.08.
• Dollar Weakens: Changes in US tariff policies cause a decline in the Dollar Index.
• RBI Meeting Ahead: All eyes on the RBI’s monetary policy announcement on February 7.
• Stock Market Rally: Sensex jumps 1,397 points; Nifty rises by 378 points.

On Tuesday, January 4, 2025, the Indian Rupee gained 3 paise against the US Dollar, closing at 87.08. This rise comes after the Rupee hit an all-time low of 87.11 on Monday. The improvement occurred as US President Donald Trump postponed tariff hikes on Mexico and Canada by a month. This decision led the Dollar Index to fall from 109.88 to 108.47, easing pressure on the Rupee.

Can RBI Support the Rupee?
Anuj Chaudhary, a research analyst at Mirae Asset Sharekhan, noted that the Rupee might remain unstable due to uncertainties around US trade tariffs. If the trade war with China escalates, the Dollar could strengthen again, pushing investors toward safer assets. However, he also mentioned that the Reserve Bank of India (RBI) might step in to support the Rupee. Investors are now focusing on the upcoming RBI monetary policy meeting from February 5-7.

Impact on Other Markets
The stock markets surged, with the Sensex climbing 1,397 points to reach 78,583.81, and the Nifty increasing 378 points to close at 23,739.25. Meanwhile, Brent crude oil was priced at $75.06 per barrel. Foreign Institutional Investors (FIIs) sold shares worth ₹3,958.37 crore.

What Lies Ahead for the Rupee?
Experts believe that if the RBI takes measures to stabilize the Rupee, it could gain more strength. Global market fluctuations will also play a significant role in the Rupee’s movement.

Conclusion:
The Indian Rupee’s slight recovery against the US Dollar offers a glimmer of hope amid global uncertainties. While the RBI’s intervention could provide further support, global economic trends and US trade policies will be crucial in shaping the Rupee’s future. Investors should keep a close watch on the upcoming RBI meeting for further cues.