Rupee rises 7 paise to 93.70 against US dollar in early trade
Forex traders said foreign investors are gradually finding their way back into the domestic market, after months of cautious participation and substantial outflows.
The Indian rupee strengthened by 7 paise to 93.70 per US dollar in early trading on Wednesday, according to early trade reports. This rise was attributed to a consistent flow of foreign capital, falling crude oil prices, and improving geopolitical sentiment. Forex traders noted that foreign investors are cautiously re-entering the domestic market, following a period of cautious involvement and significant outflows.
The rupee has become one of Asia's top-performing currencies in fiscal year 2027. If the inflow of foreign funds continues, it could provide a significant buffer against external uncertainties, according to market analysts. The rupee opened at approximately 93.71 in the interbank foreign exchange market, then rose to 93.70, which was 7 paise higher than the closing level of the previous day.
Domestic equity, currency, and debt markets were shut on Tuesday in observance of Diwali and Balipratipada. On Monday, the rupee appreciated by 21 paise to 93.77 against the US dollar. Analysts believe the rupee's upward trend is sustained due to steady foreign capital returns, lower crude oil prices, and positive geopolitical vibes.
If these favorable factors persist, the USD/INR could continue its decline towards 93.50, with 93.00 acting as the next critical level, as stated by CR Forex Advisors' Managing Director, Amit Pabari. Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, was trading at 102.26, up by 0.03 percent.
Brent crude, the global oil benchmark, increased by 1.01 percent to USD 92.41 per barrel in futures trade. The rupee benefits from cheaper oil through a reduced import bill, while higher US yields and a stronger dollar exert opposing pressure. India's inflation data, scheduled for release on Thursday, will be the next domestic policy signal, according to Anindya Banerjee, Head of Commodity and Currency Research at Kotak NEO.
Foreign institutional investors (FIIs) acquired equities worth Rs 7,212.22 crore on Monday, as per exchange data. Foreign investors turned net buyers of Indian equities in November, driven by AI-led sell-offs in global markets, strong domestic earnings growth, and attractive large-cap valuations. This investment contributed Rs 53,739 crore in the first nine days of the month, following net outflows of Rs 34,843 crore in October and Rs 35,861 crore in September.
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