MUMBAI: The rupee regained 92 levels and closed at 92.93, 27 paise stronger than its previous close. The gains came in the wake of reports that the Reserve Bank of India had asked oil companies not to buy dollars from the open market but to rely on a line of credit provided through the Indian Bank of India.The move would remove one of the main sources of demand from the interbank foreign exchange market. Traders said the initial gains were due to the policy move but were an indication of the Reserve Bank of India’s readiness for medium-term volatility in the forex market. The Reserve Bank of India did not comment on the news about the existence of a special window for oil companies.News of the reopening of the Strait of Hormuz to shipping traffic came after market hours.
The resulting decline in crude oil prices will have a major positive impact on the rupee, traders said.After the rupee was the worst performing among Asian currencies in the first quarter, it has risen significantly since the end of March and is the second best performing among Asian currencies.Meanwhile, India’s foreign exchange reserves jumped $3.8 billion to nearly $701 billion during the week ending April 10, the Reserve Bank of India said. The fund expanded to its highest level ever at $728.5 billion during the week ending February 27 of this year, before the start of the conflict in West Asia.