Rupee Rises 3 Paise To 94.78 Against US Dollar In Early Trade, High Crude Oil Prices And FII Outflows Limit Gains

Mumbai reported that the Indian rupee rose by 3 paise to 94.78 against the US dollar in early trading on Friday, October 23. This modest gain occurred as the domestic currency faced challenges from high crude oil prices and ongoing foreign institutional investor (FII) outflows. Forex traders noted that a strengthening dollar and rising oil prices hindered the rupee's recovery, despite positive movements in India's stock markets.

At the interbank foreign exchange market, the rupee started at 94.78 per US dollar, marking a 3-paise increase from the previous close. On Thursday, the Indian currency had closed at 94.81 against the US dollar. Market participants remained cautious due to ongoing global economic uncertainties and persistent withdrawals of foreign funds.

Rising crude oil prices, with Brent futures increasing by 0.42% to $113.65 per barrel, exerted further pressure on India's import-dependent economy. Higher oil costs typically boost demand for dollars from oil-importing entities, exacerbating challenges for the rupee. The dollar index also showed mild strength, up 0.04% to 101.64.

Foreign investors continued to sell Indian equities, offloading shares worth Rs 3,458.70 crore on Thursday. Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, explained that investors were gravitating towards safer dollar assets in response to rising US Treasury yields. Despite these currency market concerns, domestic stock indices traded positively during early trading hours, with the BSE Sensex rising 343.48 points to 73,592.87 and the NSE Nifty 50 up 41.65 points to 22,729.30.

Forex traders will closely watch global crude oil prices, US bond yields, dollar movements, and foreign investment flows for the next steps in the rupee's trajectory.