Rupee sees longest winning streak in 14 months: Key factors driving the rally

The Indian rupee extended its winning streak to a seventh straight session on Thursday (March 20), marking its longest rally since January 2024.

It touched a near two-month high of 86.2075 per US dollar during the day before settling at 86.3675, up 0.1% from its previous close.

Factors supporting the rupee's rise

Persistent dollar sales by foreign banks and the unwinding of short positions supported the rupee's rise despite a stronger dollar. Banks also sold dollars to lock in profits from arbitrage trades between non-deliverable and outright forwards, further aiding the currency.

A broadly weaker dollar prompted investors to trim short bets against Asian currencies. Short positions on the Chinese yuan, a key peer of the rupee, have dropped to a one-year low, according to a Reuters poll.

Over March, the yuan has gained 0.7%, while the rupee has risen 1.3%.

Global and domestic market trends

Dollar index: The US dollar index edged 0.04% lower to 103.38, reflecting global weakness.

Oil prices: Brent crude futures were up 0.58% at $71.19 per barrel.

Despite the rupee's resilience, FIIs remained net sellers, offloading equities worth ₹1,096.50 crore on Wednesday (March 19) , according to exchange data.

-With PTI and Reuters inputs

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