In a positive start to Friday’s trading session, the Indian rupee appreciated by 7 paise to 83.82 against the US dollar, buoyed by robust foreign fund inflows and a favorable trend in domestic equities. The rise comes amid a mix of global and domestic factors that have shaped investor sentiment.
Market Dynamics: A Blend of Positive and Cautionary Signals
Forex traders highlighted that an improvement in global risk sentiments played a crucial role in supporting the rupee’s appreciation. However, a concurrent recovery in the US dollar, combined with month-end dollar demand from importers and oil marketing companies (OMCs), injected a note of caution into the market.
The Indian currency opened at 83.83 at the interbank foreign exchange market before gaining ground to touch 83.82, marking a 7 paise rise from its previous close. On Thursday, the rupee had also appreciated by 8 paise, closing at 83.89 against the American currency.
MSCI Rebalancing and Rupee’s Trajectory
Experts believe that the rupee’s current strength could be further bolstered by anticipated inflows related to the MSCI index rebalancing. Amit Pabari, Managing Director of CR Forex Advisors, noted, “Some appreciation in the rupee appears likely, with anticipated MSCI inflows of around USD 3 billion. The rupee is likely to trade within a range of 83.75 to 83.90, while in the medium-term, a range of 83.60 to 84.05 is anticipated, with a bias towards the upside.”
Global and Domestic Market Indicators
Meanwhile, the dollar index, which measures the strength of the greenback against a basket of six major currencies, saw a slight uptick of 0.03 percent, reaching 101.37 points. Brent crude, the global oil benchmark, also registered a modest gain of 0.29 percent, trading at USD 80.17 per barrel in futures trade.
On the domestic front, the equity market exhibited a positive trend, with the 30-share BSE Sensex advancing by 227.63 points, or 0.28 percent, to reach 82,362.24 points. Similarly, the Nifty gained 65.70 points, or 0.26 percent, climbing to 25,217.65 points.
Foreign Institutional Investors (FIIs) maintained their bullish stance, net purchasing shares worth Rs 3,259.56 crore on Thursday, as per exchange data.
Moody’s Optimistic Outlook on India’s GDP Growth
Adding to the optimism, Moody’s Ratings on Thursday revised its GDP growth forecast for India, raising it to 7.2 percent for 2024 and 6.6 percent for 2025, citing strong broad-based growth across sectors.
As the rupee continues to show resilience, market watchers will be closely monitoring upcoming economic data and global developments to gauge the currency’s path in the near term.
