The Indian rupee ended nearly flat at 83.50 (provisional) against the US dollar on Thursday, slipping just 1 paisa from its previous close. The rupee, which had opened at 83.52, fluctuated between an intraday high of 83.48 and a low of 83.56 before settling at 83.50. This minor decline comes amidst the backdrop of elevated crude oil prices, which continue to exert pressure on the local currency.
Forex traders highlighted that positive trends in domestic equities and significant foreign fund inflows provided support to the rupee, limiting its decline. Benchmark indices in India, including the Sensex and Nifty, reached all-time high levels, buoying investor sentiment.
Anuj Choudhary, a Research Analyst at Sharekhan by BNP Paribas, remarked, “We expect the rupee to trade with a slight positive bias due to softness in the US dollar amid weak economic data and a rise in risk appetite in global markets.” However, he cautioned that high crude oil prices could cap the rupee’s gains. Choudhary forecasted that the USD-INR spot price would likely trade in the range of Rs 83.20 to Rs 83.80, with investors remaining cautious ahead of the upcoming US non-farm payrolls report.
The dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.15% at 105.24. Meanwhile, Brent crude futures, the global oil benchmark, saw a slight decline of 0.47%, trading at USD 86.93 per barrel.
In the domestic equity market, the BSE Sensex breached the historic 80,000-mark, closing 62.87 points (0.08%) higher at a record 80,049.67 points. Similarly, the NSE Nifty reached a new peak, finishing 15.65 points (0.06%) up at 24,302.15 points. Foreign Institutional Investors (FIIs) continued their buying spree, net purchasing shares worth Rs 5,483.63 crore on Wednesday, according to exchange data.
In another significant development, an official from S&P Global Ratings indicated that a sovereign rating upgrade for India is possible within the next 24 months. This potential upgrade hinges on the central government’s ability to manage its finances prudently and reduce the fiscal deficit to 4% of GDP. YeeFarn Phua, S&P Global Ratings Director of Sovereign Ratings, stated, “The trigger for an upgrade would be the government (Centre + states) deficit falling below 7% of the GDP, driven largely by the central government.”
As the rupee navigates the pressures of high crude oil prices and fluctuating global economic conditions, the positive domestic equity market performance and potential for a sovereign rating upgrade provide a silver lining for the Indian economy.