Domestic currency tumbles 2 paise to 95.76 vs US dollar, RBI intervention provides some respite

A sharp decline in domestic equity markets put further pressure on the local unit, while RBI intervention and foreign fund inflows lent support, according to forex traders

Source

The Hindu — Business →

Quick Revision

Prelims-testable facts

01The Indian rupee has fallen to 95.76 against the US dollar.
02A sharp decline in domestic equity markets put pressure on the local unit.
03RBI intervention provided support to the rupee.
04Foreign fund inflows also lent support to the rupee.
05The rupee's value is affected by rising crude oil prices.
06The rupee's value is also affected by declining equity markets.
07The rupee's value is 2 paise lower than the previous day's close.

Trap alerts

Most people think the rupee's value is affected only by crude oil prices, but actually it is also affected by declining equity markets.
Most people think RBI intervention is always effective in supporting the rupee, but actually its effectiveness can vary depending on market conditions.

Current-affairs link

The RBI has been implementing various measures to stabilize the rupee, including adjusting interest rates and intervening in the forex market, as per the RBI's Monetary Policy Statement 2022-23.

Mains Practice Question

Critically examine the factors influencing the Indian rupee's exchange rate against the US dollar, including the role of domestic equity markets and foreign fund inflows.

250 words

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Prelims Practice MCQs

Single facteasy

The rupee fell by how many paise to settle at 95.76 against the U.S. dollar?

A.1 paise
B.2 paise
C.5 paise
D.10 paise

The rupee fell by 2 paise to settle at 95.76 against the U.S. dollar, reflecting the impact of domestic market fluctuations.

Multiple statementsmedium

Consider the following statements regarding Factors Affecting the Rupee's Value: 1. The rupee's value is influenced by foreign fund inflows. 2. RBI intervention has a significant impact on the rupee's value. 3. A sharp decline in domestic equity markets has a negligible effect on the rupee's value. How many of the above statements are correct?

A.Only one
B.Only two
C.All three
D.None

Statement 1 is correct because foreign fund inflows supported the rupee (FACT 4). Statement 2 is correct because RBI intervention lent support to the rupee (FACT 3). Statement 3 is incorrect because a sharp decline in domestic equity markets put pressure on the local unit (FACT 2).

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