Rupee continues to rally, opens 9 paise stronger against US dollar
On Friday morning, the rupee showed signs of strength against the US dollar. Despite the upward trend, high crude oil prices and ongoing geopolitical tensions are pressuring the currency. The Reserve Bank of India anticipates notable foreign currency inflows this year, though these have yet to result in significant rupee gains. Additionally, domestic equities began trading on a slightly weaker…
The Indian rupee continued its upward trajectory on Friday, opening 9 paise stronger against the US dollar at 95.65 following a weakening American currency in overseas markets. Forex traders attributed this recovery to elevated crude oil prices. At the interbank foreign exchange, the rupee opened at 95.69 before climbing to 95.65, marking a contrast to Thursday's close of 95.74.
The rupee had ended Thursday 1 paisa lower after losing earlier gains. This move comes as the Reserve Bank of India anticipates foreign currency inflows of at least $80 billion from recent measures aimed at attracting dollars into India. RBI Governor Sanjay Malhotra has stated that approximately $56.85 billion has already been mobilized, with $52.3 billion through FCNR(B) deposits.
Despite these inflows, the rupee's movement has been restrained since the RBI announced the measures in June, according to Forex Advisors MD - Amit Pabari. However, unlike the 2013 FCNR(B) scheme that led to a significant rupee appreciation, this year's inflows have not resulted in substantial currency strength. While Forex traders considered the RBI Governor's comments reassuring, the impact of fresh dollar inflows has been tempered by high oil prices, geopolitical uncertainty, and a reduced foreign presence.
The dollar also faced pressure in overseas markets, with the dollar index declining by 0.15 percent to 98.74, its lowest since May. Crude oil prices, trading at $93.56 a barrel, further weighed on the rupee amid ongoing Middle East tensions and the closure of the Strait of Hormuz. Domestic equities, meanwhile, opened slightly weaker with the BSE Sensex down 25.97 points at 77,506.51 and the NSE Nifty slipping 5.75 points to 24,223.10 in early trade.
Foreign institutional investors were net sellers in the previous session, offloading equities worth Rs 583.36 crore.
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- Rupee gains 9 paise to 95.65 against US dollar in early trade thehindubusinessline.com
