Mumbai: The rupee appreciated 24 paise to close at 85.50 against the US dollar on Friday, logging the best monthly gain in over six years, supported by a resurgence of foreign fund inflows. In March this year the local unit appreciated 2.17 per cent, the maximum since November 2018 when the local unit had registered a gain of over 5 per cent.
In the current financial year the rupee has depreciated more than 2 per cent. On April 2, 2024 it was quoted at 83.42 against the US dollar. Forex dealers said the domestic unit has witnessed significant appreciation supported by robust foreign fund inflows into the capital market.
Foreign investors have infused over Rs 32,000 crore in the past six consecutive trading sessions. However, sharp upside for the local unit was restricted by weak domestic markets and rising US dollar. Moreover, investors also grappled with the potential economic impact of growing global trade concerns.
At the interbank foreign exchange, the rupee opened at 85.64 then touched an intraday high of 85.40 and a low of 85.70 against the greenback. The unit ended the session at 85.50 against the dollar, registering a gain of 24 paise from its previous closing level. On Thursday, the rupee had weakened by 5 paise to close at 85.74 against the US dollar.
“We expect the rupee to trade with a positive bias on inflows by foreign investors. However, month-end dollar demand from importers and oil marketing companies (OMCs) and elevated crude oil prices may cap sharp upside,” said Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan.
Choudhary further noted that “traders may take cues from core PCE price index data from the US. USD-INR spot price is expected to trade in a range of 85.15 to 86.70.” Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said the rupee rallied sharply driven by a strong FII inflow, which boosted sentiment and supported rupee buyers.
The dollar’s range-bound movement provided additional relief, keeping pressure on the rupee limited, he said, adding, “the rupee range is expected between 85.00-85.75, with capital flows and US economic data shaping the next move.” The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.09 per cent higher at 104.43.
Brent crude, the global oil benchmark, rose 0.16 per cent to USD 74.15 per barrel in futures trade. In the domestic equity market, the 30-share BSE Sensex fell 191.51 points, or 0.25 per cent, to settle at 77,414.92, while the Nifty declined 72.60 points, or 0.31 per cent, to close at 23,519.35 points.
Foreign institutional investors (FIIs) turned sellers and offloaded equities worth Rs 4,352.82 crore on a net basis on Friday, according to exchange data. The RBI data released on Friday showed the country’s forex reserves jumped by USD 4.529 billion to USD 658.8 billion during the week ended March 21. In the previous reporting week, the overall reserves had increased by USD 305 million to USD 654.271 billion.
Another set of data showed India’s current account deficit (CAD) inched up to USD 11.5 billion, or 1.1 per cent of GDP, in the December quarter from USD 10.4 billion (1.1 per cent of GDP) in the year-ago period, mainly due to higher trade deficit. According to the official data, the output of eight key infrastructure sectors slowed down to a five-month low of 2.9 per cent in February, as against 7.1 per cent growth registered a year ago, according to official data released on Friday.
One of the most conspicuous benefits of the rise in the value of the rupee was the gradual return of the FIIs to the Indian stock market as buyers. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
