The Indian rupee appreciated by 12 paise to 86.25 against the US dollar in early trade on Thursday, buoyed by a rally in domestic equities and the weakening of the greenback in the international market.
Foreign exchange analysts observed that the rupee’s recovery was driven by robust foreign inflows into debt markets, countering external economic pressures.
However, risks persist due to sustained foreign institutional investor (FII) sell-offs and the looming uncertainty over US President Donald Trump’s tariff policies, which could influence global trade dynamics.
At the interbank foreign exchange market, the rupee commenced trading at 86.39 per dollar before strengthening to 86.25, marking a 12-paise gain from its previous close.
On Wednesday, the domestic currency had appreciated by 19 paise, settling at 86.37 per dollar.
Amit Pabari, Managing Director of CR Forex Advisors, provided insights into the near-term movement of the rupee, stating, “The USD-INR pair is expected to trade between 86.00 and 86.80 in the near term. With FII outflows and liquidity deficit conditions persisting, a slight rebound towards the 86.50-86.60 range is likely.”
Meanwhile, the US dollar index, which measures the greenback’s performance against a basket of six major currencies, was trading marginally lower by 0.04 per cent at 103.38.
Also read: Rupee slips 10 paise to 86.66 against dollar in early trade
Brent crude, the global benchmark for oil prices, was trading 0.58 per cent higher at USD 71.19 per barrel in the futures market.
Equity markets continued to show strength, with the 30-share BSE Sensex rising by 445.32 points, or 0.59 per cent, to 75,894.37, while the broader NSE Nifty climbed 131.75 points, or 0.58 per cent, to 23,039.35.
Despite positive cues in equities, foreign institutional investors remained net sellers, offloading shares worth Rs 1,096.50 crore on Wednesday, according to data from stock exchanges.
The Reserve Bank of India (RBI), in its March bulletin released on Wednesday, stated that sound fiscal policies, a well-calibrated monetary framework, and ongoing digital transformation initiatives are expected to provide a strong foundation for long-term economic growth.
The RBI further noted that India’s macroeconomic fundamentals remain resilient, with economic expansion poised to sustain momentum, supported by robust domestic demand, consistent investment activity, and infrastructure development initiatives.
Additionally, government spending is expected to play a crucial role in bolstering growth in the near term.
While the rupee’s appreciation signals a positive trajectory, market observers remain cautious regarding external risks, particularly the impact of geopolitical developments and potential disruptions in global trade.
The trajectory of the domestic currency will likely be shaped by foreign investment trends, policy decisions, and evolving global economic conditions.
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