Rupee gains 48 paise to close at six-week high of 94.43

The rupee gained 48 paise to close at a six-week high of 94.43 against the US dollar, supported by Jio Platforms IPO-related inflows and RBI intervention. However, rising crude prices and weak domestic equities continued to weigh on sentiment

Mumbai: The rupee surged 48 paise to close at a six-week high of 94.43 (provisional) against the US dollar on Wednesday, supported by foreign currency inflows linked to Reliance Industries’ Jio Platforms IPO and RBI intervention to contain dollar demand.

However, forex market analysts said weak domestic equity markets and higher crude oil prices were putting pressure on the rupee.

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At the interbank foreign exchange market, the rupee opened at 94.78 against the dollar. During intraday trade, it touched a high of 94.41 and a low of 94.82 against the US currency. It eventually settled at 94.43 (provisional), up 48 paise from its previous close.

The Indian currency last recorded a similar closing level on September 4.

On Monday, the rupee settled 2 paise lower at 94.91 against the US dollar. Forex markets were closed on Tuesday on account of Dussehra.

“The rupee rose to a six-week high on IPO-driven foreign inflows and a relatively weak US dollar. However, weak domestic markets and elevated crude oil prices capped sharp gains,” said Anuj Choudhary, research analyst at Mirae Asset Sharekhan.

He added that the rupee was expected to trade with a positive bias amid overall weakness in the dollar and softening US Treasury yields. “The USD-INR spot price is expected to trade in a range of Rs 94.20 to Rs 94.80.”

According to analysts, a stronger rupee can ease imported inflation and reduce currency-related costs for companies importing crude oil, electronics and other raw materials. It may also benefit sectors such as aviation and oil marketing, although the actual impact depends on companies’ hedging positions and pricing.

“Foreign investors participating in large IPOs typically sell dollars to acquire rupees, increasing dollar supply in the domestic foreign exchange market. The RBI has also supported the currency through measures aimed at reducing spot-market dollar demand from oil companies and managing excessive exchange-rate volatility,” said Gaurav Garg, head of research at brokerage platform Lemonn.

However, the recovery faces significant challenges, as Brent crude prices climbed above USD 110 per barrel amid renewed tensions in the Middle East and concerns over potential supply disruptions, he added.

Going forward, the sustainability of the rupee’s recovery will depend on the continuation of IPO-related inflows, RBI intervention, crude oil prices, foreign portfolio flows and movements in the US dollar, Garg said.

The Rs 30,213-crore public offering of Jio Platforms opened for subscription on Wednesday and will close on October 23.

The issue, with a price band of Rs 1,065 to Rs 1,119 per share, was fully subscribed within 100 minutes of opening, making it the fastest-ever subscribed IPO, according to the report.

Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, was trading 0.07 per cent higher at 101.59.

Brent crude, the global oil benchmark, was trading 1.99 per cent higher at USD 110.96 per barrel in futures trade.

On the domestic equity market, the Sensex declined 143.21 points to settle at 73,709.69, while the Nifty fell 77.60 points to close at 22,811.35.

Foreign institutional investors (FIIs) sold equities worth Rs 1,148.64 crore on a net basis on Monday, according to exchange data.