In a welcome turn of events, the Indian rupee halted its three-day slide, inching up by 2 paise to settle at 83.23 against the US dollar in early trade on a Friday. The modest rebound was attributed to positive cues from the domestic equity markets and a weaker American currency overseas.
The upward momentum in crude oil prices and continued selling pressure from foreign equity investors have been factors casting a shadow on the Indian currency, according to forex traders. However, it appears that some positive drivers are starting to counterbalance these pressures.
At the interbank foreign exchange market, the rupee opened at 83.24 and gradually strengthened to reach 83.23 against the greenback, marking a 2 paise gain from its previous close. This comes as a relief after a series of declines in recent days, with the rupee settling at 83.25 against the dollar on the previous day, making it the third consecutive day of losses. Earlier in the week, the rupee had dropped 4 paise on Monday and 1 paisa on Wednesday when it closed at 83.17 against the dollar. Forex markets were closed on Tuesday due to the observance of Dussehra.
Analysts noted that the US dollar retreated as US Treasury yields dropped from their record levels, primarily in response to strong US economic data. This data included the US GDP, durable goods sales orders, and home sales figures, all of which surpassed growth estimates. Furthermore, the European Central Bank’s decision to maintain the benchmark interest rate unchanged was in line with expectations.
The dollar index, which measures the strength of the greenback against a basket of six major currencies, was trading marginally lower at 106.57 on the same Friday.
Another factor influencing the market was the significant rise in global oil prices, with the Brent crude benchmark witnessing a sharp increase of 1.27 percent, reaching USD 89.05 per barrel.
On the home front, the domestic equity market displayed resilience as the Sensex climbed 272.63 points, or 0.43 percent, to 63,420.78, and the broader Nifty rose by 88.20 points, or 0.47 percent, to 18,945.45.
However, it’s worth noting that foreign institutional investors sold equities worth Rs 7,702.53 crore on the preceding day, according to exchange data, highlighting the complexity and interplay of factors at play in the financial markets.
The Indian rupee’s minor recovery against the US dollar reflects the intricate dynamics of the global financial landscape. While several factors are influencing its performance, including oil prices and foreign investments, the currency seems to be responding positively to domestic market cues and a dip in the US dollar’s strength. As global financial markets remain volatile, the trajectory of the Indian rupee will continue to be closely monitored by investors and analysts.
