Rupee Strengthens by 27 Paise, Closing at 84.30 Against US Dollar

The Indian rupee strengthened by 27 paise, closing at 84.30 against the US dollar on Monday, thanks to a significant drop in crude oil prices and robust performance in domestic equities. Forex traders noted that ongoing foreign investor inflows bolstered the local currency, although global uncertainties continued to pose challenges. The rupee had previously shown volatility, briefly surpassing the 84-per-dollar mark before settling lower on Friday.

Rupee’s Performance in the Forex Market

In the interbank foreign exchange market, the rupee opened at 84.45 and fluctuated between a high of 84.10 and a low of 84.47 during the trading session. It ultimately closed at 84.30, reflecting a 27 paise increase from its previous closing value, as reported by news agency PTI. On Friday, the rupee had experienced notable volatility, reaching a seven-month high before ending the day at 84.57, down by 3 paise. Analysts attribute the rupee’s recent strength to sustained foreign institutional investor (FII) inflows, which have provided essential support to the domestic currency.

Impact of Crude Oil Prices

The decline in crude oil prices has played a crucial role in supporting the rupee. Year-to-date, crude oil prices have dropped over 20%, easing India’s import bill and improving macroeconomic fundamentals. Jateen Trivedi, a VP Research Analyst at LKP Securities, emphasized that the combination of FII inflows and falling crude prices has created a favorable environment for the rupee. Looking ahead, he anticipates that the rupee will trade within a range of 84.00 to 84.75, influenced by global risk sentiment and commodity price movements.

Equity Market Performance

The domestic equity markets also contributed to the rupee’s appreciation. The BSE Sensex rose by 294.85 points, or 0.37%, closing at 80,796.84, while the NSE Nifty gained 114.45 points, or 0.47%, to settle at 24,461.15. Foreign institutional investors were net buyers, acquiring equities worth Rs 2,769.81 crore on Friday. This influx of foreign capital has been instrumental in bolstering investor confidence and supporting the rupee’s value against the dollar.

Forex Reserves and Future Outlook

India’s foreign exchange reserves have also seen a positive trend, increasing by USD 1.983 billion to reach USD 688.129 billion for the week ending April 25, according to the Reserve Bank of India (RBI). This marks the eighth consecutive weekly increase, following a substantial rise of USD 8.31 billion the previous week. Analysts predict that the USD/INR spot rate may find support near 83.75, while resistance could emerge around 84.95. The dollar index, which gauges the greenback’s performance against a basket of six major currencies, was trading 0.38% lower at 99.64, further indicating a favorable environment for the rupee.

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