Rupee Strengthens Against US Dollar, Gains 4 Paise To 94.39 In Early Trade

Mumbai: In early trade on Monday, the Indian rupee showed a marginal strengthening against the US dollar, reaching 94.39 after gaining 4 paise. Strong inflows related to FCNR (dollar) contributed to the currency's rise, although heightened crude oil prices hampered further gains. The rupee opened at 94.40 against the greenback at the interbank foreign exchange market, advancing to 94.39, a 4 paise improvement from its prior close.

On Friday, it had settled 8 paise higher at 94.43 against the US dollar. FCNR (B) inflows may reduce Indian banks' funding costs by up to 50 basis points as liquidity improves. Amit Pabari, MD of Forex Advisors, noted that the support zone for the rupee currently stands at 94.00-94.20. However, intense global headwinds could push the USD-INR pair towards 95.00, followed by 95.50 and 96.00.

India's foreign exchange reserves reached a new record high, rising by $11.475 billion to $740.803 billion during the week ending August 28. The Reserve Bank of India reported this increase. Crude oil prices nearing $97 pose a significant risk to the Indian currency, as escalating US-Iran tensions raise concerns about potential disruptions to oil supplies via the Strait of Hormuz.

Brent crude futures surged 0.80% to $97.05 per barrel. The dollar index also edged 0.01% higher to 99.18 due to safe-haven demand. Domestic equities began the trading session weak, with the Sensex falling 172.77 points to 76,342.66 and the Nifty dropping 63.30 points to 23,832.60. Sensex and Nifty started the day in the red as IPO enthusiasm and Middle East tensions rattled markets.

Foreign institutional investors sold Indian equities worth Rs 3,111.94 crore on Friday, as per exchange data.