The rupee showed resilience on Tuesday, closing 3 paise higher at 83.58 (provisional) against the US dollar. This modest gain comes amid firm domestic markets and a continued influx of foreign capital.
Forex traders highlighted that a decline in crude oil prices supported the rupee, although a strong US dollar limited significant gains. At the interbank foreign exchange market, the rupee opened at 83.59 and fluctuated between an intraday high of 83.53 and a low of 83.60 before settling at 83.58.
This marks a slight recovery from Monday when the rupee had depreciated by 10 paise to close at 83.61 against the US dollar.
The dollar index, which measures the greenback’s strength against a basket of six major currencies, was trading slightly higher by 0.11 percent at 104.29. Anuj Choudhary, a Research Analyst at Sharekhan by BNP Paribas, attributed the dollar’s strength to positive US markets and rising US treasury yields, driven by increasing expectations that Donald Trump may be re-elected as President in the upcoming November elections.
In the commodities market, Brent crude futures, the global oil benchmark, were down 0.68 percent at USD 84.27 per barrel. The drop in oil prices provided some relief for the rupee.
Choudhary further commented, “We expect the rupee to trade with a slight negative bias on the strong US dollar and weak Asian currencies. However, a decline in crude oil prices and continued foreign inflows may support the rupee at lower levels.” He also noted that any intervention by the Reserve Bank of India (RBI) could bolster the local currency.
On the domestic front, the equity markets were stable. The BSE Sensex ended the day up by 51.69 points, or 0.06 percent, at 80,716.55 points. Similarly, the NSE Nifty closed 26.30 points, or 0.11 percent, higher at 24,613.00 points. Foreign Institutional Investors (FIIs) were net buyers, purchasing shares worth Rs 2,684.78 crore on Monday.
In economic news, India’s merchandise exports in June rose by 2.56 percent to USD 35.2 billion, despite global economic challenges. However, the trade deficit widened to USD 20.98 billion during the same month. Additionally, wholesale inflation surged to a 16-month high of 3.36 percent in June, driven by increased prices of food articles, especially vegetables, and manufactured items.
As the rupee navigates these turbulent waters, market observers will keep a close eye on both domestic and international factors that could influence its trajectory in the coming days.
