Indian Rupee Begins On A Firmer Note, Climbs 5 Paise To 95.57 Against The US Dollar

Mumbai witnessed the Indian rupee making a robust opening in the early trade on Wednesday, gaining 5 paise to settle at 95.57 against the US dollar. The improvement was credited to the easing of crude oil prices and a resurgence in Asian currencies. Initially, the rupee opened at 95.58 before making gains to 95.57 against the American currency. This represented a 5 paise rise from Tuesday’s closing rate of 95.62.

The respite in crude oil prices brought relief to Indian equities, with the Sensex and Nifty ending the day slightly higher as oil prices broke the $100 mark. Forex traders pointed out that the currency’s near-term trajectory would largely hinge on geopolitical scenarios, global risk sentiment, and fluctuations in energy prices.

However, the strengthened US dollar following the Federal Reserve’s rate hike and foreign portfolio investor selling curtailed the rupee’s gains. The dollar index, tracking the greenback’s performance against a basket of six currencies, rose 0.10 per cent to 100.70. Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, highlighted 96.30 as a pivotal level for the dollar-rupee pair.

He anticipated robust intervention by the Reserve Bank of India as the pair moved towards the 96.30–96.50 range. Immediate support for the rupee was seen at 95.50, followed by 95.

Positive sentiment in domestic equities also bolstered the domestic currency. The BSE Sensex gained 283.66 points to 74,812.74 in early trade, while the NSE Nifty climbed 85.55 points to 23,414.55. However, persistent foreign fund outflows from Indian equities, totaling ₹3,809.99 crore on a net basis on Tuesday, posed a concern. Traders will now vigilantly watch crude oil, the dollar index, geopolitical developments, and Reserve Bank of India’s actions for cues on the rupee’s subsequent move.