INR vs USD: Indian rupee rises to 93.65 against US dollar in early trade on April 2

After US President Donald Trump’s speech on Wednesday evening in the United States, the US dollar rates surged to cross the 100 psychological level due to the heightened uncertainty over a potential end to the US-Iran conflict in West Asia.

During his 19-minute speech, Trump threatened Iran with further escalation motives by saying that the United States will be hitting the Gulf country ‘extremely hard’ over the next two to three weeks amid its conflict wrapping up plans this month.

“We’re going to bring them back to the stone ages, where they belong,” said Donald Trump, according to a CNBC report. This threat flared up a sudden surge in global oil prices and US dollar rates, which in turn turned into a bearish trigger for the emerging market currencies like the Indian rupee, and eroding the gains in the commodity market.

The Bloomberg US Dollar spot index data showed that the greenback was trading 0.35% higher at 100.0010 as of 12:06 am (EDT), on April 2, compared to 99.6510 at the previous market close.

As of 10:29 am, the Indian rupee was trading 0.40% higher at 93.58 against the US dollar, compared to 93.20 in its previous levels, according to the data collected from Investing.com.

RBI action

The Reserve Bank of India (RBI) on Wednesday, April 1, announced more action focusing on its banks which are authorised to deal in foreign exchange, according to a PTI report. RBI’s move to announce more action comes after the central bank conducted a “review of evolving market conditions.”

As per the new norms, the banks will not be able to offer non-deliverable derivative contracts involving the Indian rupee to resident or non-resident users.

The banking regulator also announced that the banks will not permit a user to rebook any forex derivative contract which is cancelled after the date of issuance of these instructions.

RBI also permitted that the banks may call for such information or documents from users as they deem necessary for complying with the requirements. This action comes after the Indian rupee breached the psychologically important Rs 95 to a US dollar mark in intra-day trade earlier this week.