The rupee has strengthened further against the US dollar in the interbank market, rising by Rs1.12 during morning trade. At around 9:43 am, the dollar was being traded at Rs287.63, compared to the previous day’s closing rate of Rs288.75. In the open market, the dollar saw a reduction of Rs1.5 and was traded at Rs288.5. This appreciation of the rupee is attributed to the military-backed crackdown on the illegal outflows of the dollar, which has been ongoing for several weeks.
However, analysts are uncertain about whether this trend will be sustained. Previously, similar gains in the rupee were short-lived, as the underlying issue of too many rupees chasing too few dollars remained unchanged. Despite the current stability, there are concerns that the rupee’s strength may not be sustainable in the long term.
Overall, the rupee’s recent gains against the US dollar can be attributed to the government’s efforts to curb illegal outflows of the dollar. While this has resulted in a short-term appreciation of the rupee, analysts remain cautious about the long-term sustainability of this trend due to the underlying economic imbalance between the rupee and the dollar.