The Indian rupee showcased resilience on Tuesday, appreciating by 5 paise to reach 83.11 (provisional) against the US dollar. This positive momentum was driven by a weakened greenback against major currencies globally, coupled with a subdued trend in domestic equities.
At the interbank foreign exchange market, the local unit opened at 83.14 against the US dollar, experiencing a narrow trading range throughout the day. The unit reached an intraday low of 83.15 and a high of 83.11 against the greenback, finally settling at 83.11, marking a 5-paise increase from its previous close.
The previous day had seen a slight depreciation of 5 paise for the rupee, closing at 83.16 against the US dollar.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, provided insights into the factors influencing the rupee’s performance. The rupee gained traction on Tuesday due to the softening of the US Dollar and a decline in crude oil prices. However, the gains were tempered by weak domestic markets, as the US Dollar eased slightly amid rising risk appetite in global markets.
Choudhary anticipates the rupee to trade with a slight negative bias due to month-end Dollar demand from importers and concerns over geopolitical tensions in the Middle East and the Red Sea. Factors such as a recovery in the US Dollar or crude oil prices may exert additional pressure on the rupee. Nevertheless, a rise in risk appetite in global markets could lend support at lower levels.
Investors are advised to exercise caution in light of the upcoming US Federal Open Market Committee (FOMC) meeting and India’s Budget scheduled for later in the week. The USD/INR spot price is expected to fluctuate within the range of ₹82.90 to ₹83.40.
In the broader financial landscape, the dollar index, measuring the greenback’s strength against a basket of six currencies, traded 0.06% lower at 103.55. Simultaneously, Brent crude futures, the global oil benchmark, recorded a 0.27% surge, reaching $82.62 per barrel.
Domestically, the equity market witnessed a decline, with the Sensex dropping 801.67 points (1.11%) to 71,139.90 points, and the Nifty falling 215.50 points (0.99%) to 21,522.10 points. Foreign Institutional Investors (FIIs) exhibited a net buying trend in the capital markets on Monday, purchasing shares worth ₹110.01 crore, as per exchange data.
