The Indian rupee showed a modest gain against the US dollar on Tuesday, appreciating by 3 paise to settle at 83.44 in the interbank foreign exchange market. This upward movement was supported by a positive trend in domestic equities and stable global crude oil prices.
The local unit opened at 83.46, hit an intraday high of 83.41, and a low of 83.48 before closing at 83.44, registering a 3 paise increase from the previous close of 83.47 on Monday. This marks a continuation of the rupee’s strengthening, having appreciated by 10 paise on the previous day.
Forex traders indicated that the gains in the rupee were tempered by the strength of the US dollar in overseas markets, which limited a more significant rise. Anuj Choudhary, a Research Analyst at Sharekhan by BNP Paribas, noted, “We expect the rupee to trade with a slight positive bias as positive domestic markets and a soft US dollar may support the rupee. However, a rise in crude oil prices and geopolitical tensions may cap a sharp upside.”
Choudhary also mentioned that investors might remain cautious ahead of the US core Personal Consumption Expenditures (PCE) data release this week. The USD/INR spot price is expected to trade within the range of Rs 83.20 to Rs 83.65.
The dollar index, which measures the greenback’s strength against a basket of six currencies, was slightly up by 0.03 percent, trading at 105.50. Meanwhile, Brent crude futures, the global oil benchmark, were down by 0.48 percent, trading at USD 85.60 per barrel.
On the domestic equity front, the BSE Sensex surged by 712.44 points, or 0.92 percent, to close at a record high of 78,053.52. The broader NSE Nifty also reached a new peak, rising 183.45 points, or 0.78 percent, to settle at 23,721.30.
Despite the positive trends in equities, Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday, offloading shares worth Rs 653.97 crore, as per exchange data.
On the macroeconomic front, S&P Global Ratings maintained India’s GDP growth forecast at 6.8 percent for the current financial year, citing high interest rates and reduced fiscal stimulus as factors that might temper demand. Additionally, the Reserve Bank of India reported a current account surplus of USD 5.7 billion, or 0.6 percent of GDP, for the March quarter.
This combination of firm domestic equity performance, cautious forex market sentiment, and stable crude prices continues to shape the trajectory of the rupee in the near term.
