Rupee Inches Up to 88.11 Against Weaker Dollar

The Indian rupee saw a slight uptick in early trade on Friday, gaining 1 paisa to reach 88.11 against the US dollar. This minor rise came amid a softer greenback and declining global crude oil prices. Forex traders noted that these factors provided some support to the local currency. However, they also highlighted that sustained outflows by foreign institutional investors limited further gains. Positive sentiment in domestic equity markets added to the rupee’s strength, helping it recover from the record low levels hit earlier in the week. At the interbank foreign exchange, the rupee opened at 88.11. It briefly slipped to 88.15 before settling back at 88.11, marking a 1 paisa increase from its previous close. On Thursday, the currency had fallen 10 paise to close at 88.12 against the dollar. Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, shared his outlook. He said the rupee is expected to stay within a range of 88 to 88.30 for the day as markets await US non-farm payrolls data. Bhansali pointed out that the Reserve Bank of India has been defending the 88.20 level over the past four days. The dollar index, which measures the US currency against a basket of six peers, fell 0.24 percent to 98.10. This decline in the dollar contributed to the rupee’s slight appreciation. Meanwhile, Brent crude futures, the global oil benchmark, traded 0.15 percent lower at $66.89 per barrel. Lower oil prices benefit oil-importing countries like India, easing pressure on the currency. On the domestic front, equity markets showed strong positive momentum. The Sensex jumped 318.55 points to 81,036.56 in early trade. The Nifty also rallied, gaining 98.05 points to reach 24,832.35. This bullish trend in stocks provided additional support to the rupee. However, foreign institutional investors were net sellers in the previous session. Exchange data revealed that they offloaded equities worth Rs 106.34 crore on Thursday. Such outflows typically weigh on the rupee, limiting its upward movement. The interplay of these factors kept the currency’s gains in check. Market participants are closely watching the upcoming US economic data. The non-farm payrolls report could influence global currency trends and impact the rupee’s trajectory. For now, the local unit remains sensitive to both domestic and international developments. The rupee’s movement reflects the complex dynamics of global finance. Oil prices, dollar strength, and foreign investment flows all play crucial roles. Domestic equity performance adds another layer to this intricate picture. Traders and investors keep a close eye on these indicators to gauge the currency’s direction. The Reserve Bank of India’s actions also remain a key factor. By intervening to protect certain levels, the central bank aims to ensure stability in the foreign exchange market. This proactive approach helps manage volatility and supports the economy. In summary, the rupee’s modest gain highlights the ongoing balance between supportive and restraining forces. While external factors like a weaker dollar and lower oil prices help, internal issues such as FII outflows pose challenges. The currency market continues to navigate these mixed signals, awaiting clearer cues from upcoming data releases.