Rupee strengthens by 19 paise to settle at 83.10 vs dollar

Forex Market Update: The rupee strengthened by 19 paise, or 0.2 per cent, to settle at 83.10 against the US dollar on Friday, continuing to appreciate for the fourth session in a row. Analysts said foreign fund inflows and suspected Reserve Bank of India (RBI) intervention supported the domestic currency against the greenback. 

The rupee began the day at 83.26 against the American currency and gyrated within a range of 83.03-83.26 in intraday trade before settling at 83.10 against the dollar.

INR vs USD: What's supporting the rupee against the US dollar? 

The dollar index—which gauges the US currency against six peers other than the rupee—was down 0.3 per cent at 104.69 at the last count.

Brent crude futures were last down 0.7 per cent at $80.8 per barrel.

This week, the central bank announced a record dividend payout of Rs 2.11 lakh crore to the government for the financial year 2023-24, more than double the budgeted expectation.

The country's forex market remained shut on Thursday for the Buddha Purnima holiday.

Forex reserves hit a record high

The country's foreign exchange reserves expanded for the third week in a row. The reserves grew by $4.549 billion to a lifetime high of $648.7 billion in the week ended May 17, according to RBI data. In the process, they touched a fresh lifetime high.

Gold reserves rose by $1.244 billion to $57.195 billion during the week.

The country's forex reserves are sufficient to cover around 11 months of projected imports, according to the Monthly Economic Review report of the Department of Economic Affairs under the Ministry of Finance.

What are forex reserves?

Forex reserves are assets that are held by a nation's central bank or monetary authority. As crucial assets held by countries in various foreign currencies, these reserves serve as a financial buffer and play a significant role in stabilising a nation's economy.

Forex reserves act as a safety net during economic uncertainties, ensuring that a country can meet its international obligations and maintain stability in the foreign exchange market.

Here are some important things to know about forex reserves:

• Forex reserves help in managing exchange rate fluctuations, preventing excessive volatility in currency values
• They support international trade by providing confidence to trading partners and investors
• Forex reserves can be used to intervene in the foreign exchange market to regulate currency value and promote economic stability
• Forex reserves are a critical component of a country's economic strategy, safeguarding against external shocks and supporting overall financial resilience

With inputs from agencies