The Indian rupee showcased resilience as it rebounded from recent lows, appreciating by 12 paise to trade at 83.49 against the US dollar in early trade on Thursday. This positive movement was supported by a firm trend in domestic equities and gains observed in Asian currencies.
Factors Driving Rupee’s Recovery
Forex traders attribute the rupee’s gains to the retreat of the US dollar from its elevated levels. At the interbank foreign exchange market, the local unit opened at 83.51 against the greenback and later touched 83.49, marking a notable rise from its previous close.
Previous Market Performance and Current Outlook
On Tuesday, the Indian rupee witnessed a significant decline, plunging by 17 paise to reach its lowest level of 83.61 against the US dollar for the second time in four weeks. However, with the resumption of forex and money markets after ‘Ram Navami’, the rupee has shown signs of recovery.
Insights from Treasury Advisors
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, highlights the factors influencing the rupee’s trajectory. He anticipates the rupee to trade within a range of 83.45 to 83.65, with foreign portfolio investors (FPIs) and oil companies engaging in dollar purchases, while the Reserve Bank of India (RBI) intervenes by selling the American currency.
Dollar Index Movement and Brent Crude Prices
The dollar index, indicating the greenback’s strength against a basket of currencies, experienced marginal decline as traders evaluated US interest rate prospects. Concurrently, Brent crude futures, a key determinant for India’s import bill, rose by 0.33% to $87.58 per barrel, influencing sentiment in the currency market.
Analysis of Stock Market and Capital Flows
The Indian equity market witnessed positive momentum, with the BSE Sensex and NSE Nifty advancing in early trade. Despite net selling by Foreign Institutional Investors (FIIs) in the capital markets on Tuesday, domestic indices demonstrated resilience, reflecting investor optimism.
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