The Indian rupee made a commendable ascent against the US dollar on Monday, closing at 83 (provisional), marking a gain of 7 paise. This upward trajectory was attributed to the softness observed in the American currency coupled with a decline in crude oil prices. However, the rupee’s upward momentum was tempered by weak domestic market sentiments and foreign fund outflows, according to forex traders.
Starting the day at 83.01 against the greenback, the rupee fluctuated within a narrow range throughout the trading session. It recorded an intraday high of 82.98 and a low of 83.02 before settling at 83 (provisional), representing a 7 paise increase from its previous close of 83.07.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, remarked, “We expect the rupee to trade with a slight positive bias, supported by positive global equities and a minor correction in the greenback.” However, Choudhary cautioned that any resurgence in crude oil prices amidst ongoing geopolitical tensions in the Middle East, coupled with selling pressure from foreign investors, could exert downward pressure on the rupee at higher levels.
Market participants are closely monitoring India’s Consumer Price Index (CPI) and Index of Industrial Production (IIP) data for further cues. Additionally, anticipation prevails ahead of US inflation data scheduled for release on Tuesday.
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, marginally rose by 0.04 percent to 104.15. In tandem, Brent crude futures, the global oil benchmark, dipped by 0.51 percent to USD 81.77 per barrel.
On the domestic front, the equity market witnessed a downturn, with the Sensex declining by 523 points (0.73 percent) to 71,072.49, and the Nifty falling by 166.45 points (0.76 percent) to 21,616.05. Foreign Institutional Investors (FIIs) emerged as net buyers in the capital markets on Friday, injecting Rs 141.95 crore into shares, as per exchange data.
Meanwhile, the Reserve Bank of India reported a significant surge in India’s forex reserves, which increased by USD 5.736 billion to USD 622.469 billion for the week ended February 2, following a previous week’s uptick of USD 591 million to USD 616.733 billion.