The rupee strengthened for a second consecutive session, settling under the 93-per-dollar mark amid reports that the Reserve Bank of India (RBI) has asked oil companies to refrain from purchasing dollars in the spot market and instead utilise a special window. 

The Indian currency closed at 92.93, compared with 93.20 at the previous close. The rupee, which rose 0.29 per cent on Friday, ranked among the better-performing Asian currencies; only the Korean won, Japanese yen, Singapore dollar and Thai baht recorded larger gains. 

Furthermore, foreign exchange reserves for the week ended April 10 edged above the $700 billion mark, driven by an increase in foreign currency assets. 

“The rupee extended its winning streak for a second session,” said Dilip Parmar, senior research analyst at HDFC Securities. “Softening crude oil prices, a weaker greenback against major currencies, a pause in gold imports by banks, and reduced dollar demand from oil importers further supported the local currency,” he added. 

The Directorate General of Foreign Trade (DGFT) only on Friday afternoon issued a notification permitting 15 major banks to import gold and silver. Banks had paused imports of these metals, awaiting the order that typically is released soon after the start of the financial year. 

After depreciating by over 4 per cent in March following the conflict in West Asia, the currency has gained over 2 per cent so far this month, after the central bank introduced regulatory measures to curb volatility in the foreign exchange market. 

“With the RBI announcing further measures to take oil companies out of dollar demand, the rupee strengthened again to 92.65 levels,” said Anil Kumar Bhansali, executive director and head of treasury at Finrex Treasury Advisors. “These measures may continue for as long as the lines of credit remain available, which could be for a month or so. The rupee could gradually appreciate towards 92.00, as a significant portion of demand has been removed from the market, while foreign portfolio investors have turned dollar sellers as equities rise,” he said. 

Foreign exchange reserves, meanwhile, rose by $3.8 billion to reach nearly $701 billion for the week ended April 10, largely due to a $3.1 billion increase in foreign currency assets. Gold reserves increased by $601 million. 

After reaching an all-time high of $728 billion for the week ended February 27, reserves declined by $40 billion in March as the central bank intervened heavily to contain exchange rate volatility following the West Asia crisis. Over the past two weeks, reserves have risen by $13 billion as stability returned amid peace talks between Iran and the United States.