Rupee rises 13 paise to settle at 94.71 against US dollar
A recovery in crucial oil prices due to geopolitical uncertainties capped gains in the Indian currency, according to forex traders.
The Indian rupee rose 13 paise to settle at 94.71 against the US dollar on Tuesday, bolstered by a surge of foreign funds and robust buying in domestic equity markets. Forex traders noted that a recovery in crucial oil prices, fueled by geopolitical uncertainties, restrained the currency's gains. The rupee began the trading day at 94.68, reaching a peak of 94.60 against the greenback.
During the session, the rupee retreated 8 paise from Monday's close of 94.84, after climbing 50 paise on Friday. Anuj Choudhary, a Research Analyst at Mirae Asset Sharekhan, attributed the rupee's increase to a surge in domestic markets and a weakening dollar. However, he noted that a rebound in crude oil prices capped the gains.
Analysts anticipate the rupee to maintain a positive tone, supported by strength in domestic markets and expectations of changes in Long-Term Capital Gains (LTCG). They also expect fresh weakness in the dollar and additional foreign inflows to further bolster the rupee. Nevertheless, tensions between Ukraine and Russia, as well as attacks in the Middle East, may put a cap on the currency's upside.
Traders are advised to monitor the Institute for Supply Management (ISM) manufacturing Purchasing Managers' Index (PMI) data from the US. The dollar index, which measures the greenback's strength against six currencies, stood at 101.69, up 0.07 percent. Brent crude, the global oil benchmark, had increased by 0.86 percent to USD 105.67 per barrel.
Analysts pointed out that oil prices rebounded after the US conducted fresh strikes on Iranian targets in the Strait of Hormuz, raising concerns over potential global trade disruptions. On the domestic stock market, the Sensex climbed 1,225.07 points, or 1.62 percent, to close at 76,917.85, while the Nifty rose 370.05 points, or 1.58 percent, to 23,810.85.
Foreign Institutional Investors (FIIs) were net buyers for the second consecutive day on Monday, purchasing equities worth Rs 3,114.68 crore on a net basis.
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