Rupee Strengthens Further, Opening 9 Paise Higher Against the US Dollar
Rupee strengthened against the US dollar on Friday, gaining 9 paise to reach 95.65. This rise comes as the dollar weakened in overseas markets. However, the rupee’s recovery is limited by high crude oil prices, according to forex traders.
At the interbank foreign exchange, the rupee opened at 95.69 before improving to 95.65, compared to Thursday’s close of 95.74. The currency had ended Thursday down by 1 paisa after initially gaining. The Reserve Bank of India (RBI) anticipates foreign currency inflows of at least $80 billion from measures introduced earlier this year to attract dollars into India. RBI Governor Sanjay Malhotra noted that approximately $56.85 billion has already been mobilized, including $52.3 billion through FCNR(B) deposits.
Despite these inflows, the rupee has shown limited movement since the RBI’s announcement in June. Amit Pabari, MD of CR Forex Advisors, remarked that unlike the FCNR(B) scheme of 2013, which led to a significant appreciation of the rupee, this year’s inflows have not resulted in a similar strengthening. Forex traders indicated that while the RBI Governor’s comments offered some reassurance, the impact of new dollar inflows is being countered by high oil prices, ongoing geopolitical uncertainty, and a reduced foreign presence in the market.
The dollar index, which measures the greenback against a basket of six currencies, was down 0.15 percent at 98.74, marking its lowest level since May. Crude oil prices also weighed on the rupee, with Brent crude trading 0.23 percent lower at $93.56 a barrel amid ongoing tensions in the Middle East. Pabari highlighted that the conflict has disrupted over 20 percent of the region’s refining capacity, with the Strait of Hormuz remaining shut, limiting fuel exports from a crucial energy route.
In the domestic market, equities opened slightly lower. The BSE Sensex fell by 25.97 points to 77,506.51, while the NSE Nifty dropped 5.75 points to 24,223.10 in early trading. Foreign institutional investors were net sellers in the previous session, offloading equities worth Rs 583.36 crore on Thursday, according to exchange data.
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