Rupee rises 29 paise to 94.62 against US dollar in early trade

The Indian rupee surged 29 paise to 94.62 per US dollar in early trade on Wednesday, buoyed by positive market sentiment and support from the Reserve Bank of India (RBI). Additionally, the currency benefited from foreign dollar inflows linked to the Jio Initial Public Offering (IPO), which commenced subscription on Wednesday, according to analysts.

However, the gains were tempered by high crude oil prices and a strong US dollar. In the interbank foreign exchange market, the rupee opened at 94.78 and further strengthened to 94.62 against the US dollar, marking a 29-paise increase from its previous close. On Monday, the rupee had slipped by 2 paise to 94.91 against the US dollar.

This upward movement is primarily driven by foreign dollar inflows related to the Jio IPO, coupled with RBI support. Foreign investors navigating the IPO allotment process rely heavily on sell/buy swaps, converting dollars to rupees in the spot market and agreeing to repurchase them within a short period, usually less than a week, as explained by Aamir Makda, Commodity & Currency Analyst at Choice Broking.

Despite these favorable factors, elevated oil prices pose a significant obstacle for the domestic currency. Analysts predict that the rupee will likely trade within a range of 94.00 to 94.75 against the dollar throughout the day. Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, is currently at 101.58, up slightly by 0.06 percent.

The price of Brent crude, the global oil benchmark, has risen by 1.42 percent to USD 110.33 per barrel in futures trade. In the domestic equity market, the Sensex added 665.10 points to reach 74,518, while the Nifty rose by 188.40 points to 23,077.35. On Monday, Foreign Institutional Investors (FIIs) sold equities worth Rs 1,148.64 crore on a net basis, as per exchange data.