Rupee Strengthens by 33 Paise Amid Dollar Weakness; Sensex and Nifty Close Higher
NEW DELHI: The Indian rupee strengthened against the US dollar on Friday, gaining 33 paise to close at 94.93. This uptick was supported by a weaker dollar and positive sentiment in the domestic equity markets. However, rising crude oil prices and broader market weaknesses limited the rupee’s gains.
The rupee opened at 95.21 in the interbank foreign exchange market and fluctuated throughout the day, reaching an intraday high of 94.94 and a low of 95.28 before settling at 94.93. This represented a recovery from Thursday’s close of 95.26, where the rupee had only gained 2 paise after trading within a narrow range. Forex traders noted that the rupee and bond market received support from declining crude oil prices and intervention by the Reserve Bank of India (RBI).
Global indicators also played a role in the rupee’s performance. The dollar index, which measures the US dollar against a basket of six currencies, fell by 0.37% to 101.66. Meanwhile, Brent crude futures dropped 1.03% to $114.13 per barrel. On the domestic front, benchmark indices closed higher, with the Sensex rising by 308.49 points to 74,459.53 and the NSE Nifty50 increasing by 116.35 points to 23,053.10.
Analysts suggest that geopolitical developments and fluctuations in crude oil prices will continue to influence the rupee’s trajectory. Anuj Choudhary, a research analyst at Mirae Asset Sharekhan, indicated that tensions in the Middle East could lead to a slight negative bias for the rupee. He noted that a further increase in crude oil prices might exert downward pressure on the currency, while favorable domestic market conditions and a softer US dollar could provide some support.
Foreign institutional investors were net sellers in the equity market, offloading shares worth Rs 943.60 crore on Thursday, according to exchange data. The rupee’s movement occurs amid ongoing discussions regarding the RBI’s intervention in the foreign exchange market. The International Monetary Fund (IMF) recently stated that exchange rate flexibility should be the preferred approach for India to manage energy shocks. IMF communications director Julie Kozack emphasized the importance of allowing the exchange rate to reflect external shocks to aid the Indian economy’s adjustment.
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