The Indian Rupee showed strength on Friday, gaining 10 paise to provisionally close at 87.78 against the U.S. dollar. This positive movement was primarily fueled by a sense of optimism surrounding ongoing trade discussions between India and the U.S., coupled with a noticeable dip in global crude oil prices.
Despite this upward trend, the local currency’s potential for more significant gains was tempered. Factors such as continued outflows from Foreign Institutional Investors, a generally stronger U.S. dollar across other major currencies, and a somewhat subdued mood in domestic equity markets acted as headwinds, according to foreign exchange experts.
In the interbank foreign exchange market, the rupee commenced trading at 87.78 against the U.S. dollar. Throughout the day, it fluctuated within a narrow band of 87.63 to 87.85 before finally settling at its provisional closing rate of 87.78, marking a 10-paise appreciation from its previous close.
This positive Friday performance follows a similar trend from Thursday, October 23, when the rupee had also risen, closing 5 paise stronger at 87.88 against the U.S. dollar.
“The rupee has been trading with a positive momentum, driven by encouraging expectations around the India-US trade deal,” noted Anuj Choudhary, a Research Analyst specializing in Currency and Commodities at Mirae Asset ShareKhan. He further commented, “We anticipate the rupee to maintain this positive bias, buoyed by an increase in risk appetite spurred by trade deal optimism and fresh Foreign Direct Investment inflows. A potential easing of geopolitical tensions could also lend further support to the Indian currency.”
Choudhary added a note of caution, stating, “Investors are still proceeding with circumspection as they await the release of crucial U.S. inflation data. The USD/INR spot price is projected to trade within a range of ₹87.45 to ₹88.10 in the near term.”
Globally, the dollar index, which measures the strength of the greenback against a basket of six major currencies, registered a modest gain of 0.10%, reaching 99.03.
In the commodities market, Brent crude, the international benchmark for oil, saw a slight downturn, trading 0.11% lower at $65.92 per barrel in futures trading.
Turning to the domestic stock markets, the Sensex closed down by 344.52 points at 84,211.88, while the Nifty also experienced a decline, losing 96.25 points to settle at 25,795.15.
Exchange data revealed that Foreign Institutional Investors (FIIs) were net sellers on Thursday, October 23, offloading equities worth Rs 1,165.94 crore.