Rupee Strengthens by 31 Paise Amid Weaker Dollar, Declining Oil Prices, and Ongoing FII Inflows
Falling global crude oil prices and a weaker US dollar propelled the Indian rupee higher in early trading on Monday. The currency gained 31 paise against the US dollar, supported by foreign fund inflows, increased forex reserves, and ongoing intervention by the Reserve Bank of India (RBI), according to forex traders. The rupee opened at 95.15 in the interbank foreign exchange market and strengthened to 95.12, marking a gain from its previous close of 95.43.
The rupee’s rise follows a positive sentiment shift after US President Donald Trump announced he would not proceed with planned strikes on Iran. Trump indicated that American forces were prepared for a significant military response but opted for diplomacy after discussions with Gulf allies, including Saudi Arabia and Qatar. This easing of geopolitical tensions contributed to a decline in oil prices, with Brent crude falling 5% to $83.66 a barrel.
Factors Supporting the Rupee
Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors LLP, attributed the rupee’s strength to lower Brent crude prices, a weaker dollar, and sustained foreign portfolio inflows. He noted that the RBI’s presence in the foreign exchange market also played a role. Bhansali mentioned that the rupee opened at 95.15 on Monday and is expected to trade within the range of 95.00 to 95.50.
Domestic indicators further bolstered the rupee’s performance. Foreign Institutional Investors (FIIs) purchased equities worth Rs 277.48 crore on a net basis on Friday, according to exchange data. Additionally, the RBI reported a rise in India’s foreign exchange reserves by $6.118 billion to $682.354 billion for the week ending July 24. In the previous week, reserves had increased by $1.08 billion to $676.237 billion.
In early trading, Dalal Street also showed positive momentum, with the Sensex climbing 470.06 points to 78,564.70 and the Nifty gaining 150 points to reach 24,532.95. Separately, data from the Controller General of Accounts revealed that the Centre’s fiscal deficit stood at 18.2% of the full-year target at the end of June.
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