The Indian rupee strengthened by 6 paise to settle at 83.07 against the US dollar on Friday, fueled by robust activity in the domestic equity markets and a weakened American currency on the international front.
However, the sharp gain in the domestic currency was curbed by rising crude oil prices and foreign capital outflows, according to observations from forex traders. In the interbank foreign exchange, the rupee opened at 83.15, fluctuating between the day's peak of 83.05 and the lowest level of 83.16 against the greenback. Ultimately, it closed at 83.07, marking a 6-paise gain from the previous close.
On the preceding Thursday, the rupee settled slightly higher at 83.13 against the US dollar. Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, explained that the rupee's appreciation was a result of positive trends in the domestic markets and the softening stance of the US dollar. However, the recovery in crude oil prices and recent foreign institutional investor (FII) outflows tempered the gains.
Choudhary expressed a positive outlook for the rupee, anticipating a slight bias towards strength due to positive global equities and a weakened US dollar. He projected the USD-INR spot price to trade within the range of Rs 82.80 to Rs 83.50.
Simultaneously, the dollar index, measuring the greenback's strength against a basket of six currencies, traded 0.17% lower at 103.13 on Friday. Analysts linked this dip to US macroeconomic data revealing steady growth in the world's largest economy, dispelling hopes of an immediate interest rate cut by the Federal Reserve.
Brent crude futures, the global oil benchmark, experienced a 0.68% rise, reaching USD 79.64 per barrel. On the domestic equity front, the Sensex surged by 496.37 points (0.70%) to settle at 71,683.23 points, while the Nifty climbed 160.15 points (0.75%) to 21,622.40 points.
Foreign institutional investors (FIIs) were net sellers in the equity market on Friday, with sales totaling Rs 3,689.68 crore, as per exchange data. Jateen Trivedi, VP Research Analyst at LKP Securities, emphasized the rupee's robust range condition, showcasing strength around the 83.25-83.35 band and weakness near the 82.80-82.90 band.
(With Agency Inputs)