The Indian rupee strengthened for the second consecutive session on August 20, rising by 8 paise to settle at 83.79 (provisional) against the US dollar. The local currency was buoyed by positive domestic equity markets, a weaker American dollar, and declining crude oil prices.
At the interbank foreign exchange, the rupee opened at 83.86 against the greenback, fluctuating within a range of 83.76 to 83.88 throughout the trading session. The rupee’s gain from its previous closing level was driven by favorable market conditions, although foreign fund outflows curbed a more substantial rise.
On the previous trading day, the rupee had similarly closed 8 paise higher at 83.87 against the US dollar. Anuj Choudhary, a Research Analyst at Sharekhan by BNP Paribas, attributed the rupee’s rise to the highest levels in nearly two and a half weeks to a weaker US dollar and robust domestic markets. “A decline in crude oil prices also supported the rupee. However, FII outflows capped sharp gains,” Choudhary noted.
The dollar index, which measures the greenback’s strength against a basket of six major currencies, was slightly lower by 0.04% at 101.68, reflecting the US dollar’s weakness. Analysts pointed out that the US dollar has dipped to a seven-month low amid growing expectations of a rate cut by the Federal Reserve.
Looking ahead, Choudhary suggested that the USD-INR spot price is likely to trade within a range of Rs 83.50 to Rs 84. He also noted that concerns over upcoming PMI data from the US and Federal Reserve Chair Jerome Powell’s anticipated speech at the Jackson Hole Symposium later this week could keep investors cautious.
On the commodities front, Brent crude, the global oil benchmark, declined by 0.31% to $77.42 per barrel, further supporting the rupee’s strength.
In the domestic equity markets, the Sensex climbed 378.18 points, or 0.47%, to reach 80,802.86 points, while the Nifty rose by 126.20 points, or 0.51%, to close at 24,698.85 points.
Despite the positive market sentiment, foreign institutional investors (FIIs) remained net sellers in the capital markets on Monday, offloading shares worth Rs 2,667.46 crore, according to exchange data.