Rupee gains 9 paise to 95.65 against US dollar in early trade
The rupee gained 9 paise to 95.65 against the US dollar in early trade on Friday, supported by a weaker American currency. However, elevated crude oil prices and geopolitical uncertainty continued to weigh on the domestic currency, forex traders said
Mumbai: The rupee gained 9 paise to 95.65 against the US dollar in early trade on Friday, supported by the weakening of the American currency in overseas markets.
Forex traders said that for India, a softer dollar is being offset by another challenge, elevated crude oil prices.
Meanwhile, RBI Governor Sanjay Malhotra has indicated that the central bank expects at least USD 80 billion of foreign currency inflows.
According to forex traders, while the RBI Governor’s statement offered some reassurance, elevated oil prices, persistent geopolitical uncertainty and a structurally reduced foreign presence continue to neutralise fresh dollar inflows.
At the interbank foreign exchange, the rupee opened at 95.69, then rose to 95.65, higher by 9 paise from its previous close.
On Thursday, the rupee pared initial gains and settled for the day down 1 paisa at 95.74 against the US dollar.
“Governor Sanjay Malhotra indicated that the central bank expects at least USD 80 billion of foreign currency inflows from the measures announced earlier this year to attract dollars into India. So far, around USD 56.85 billion has already been mobilised, including USD 52.3 billion through FCNR(B) deposits,” CR Forex Advisors MD Amit Pabari said.
However, unlike the famous FCNR(B) scheme of 2013, which sparked an immediate double-digit appreciation in the rupee, this year’s inflows have not translated into meaningful currency strength. Since the RBI announced these measures in June, the rupee has barely responded, Pabari added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.15 per cent at 98.74, its lowest level since May.
Brent crude, the global oil benchmark, was trading lower by 0.23 per cent at USD 93.56 per barrel in futures trade, as the geopolitical situation in the Middle East remains tense, with fresh warnings from US President Donald Trump to countries supporting Iran.
“The conflict has already disrupted more than 20 per cent of the region’s refining capacity, while the Strait of Hormuz remains shut, restricting fuel exports from one of the world’s most important energy routes,” Pabari added.
On the domestic market front, Sensex was trading lower by 25.97 points at 77,506.51 in early trade, while the Nifty skid 5.75 points to 24,223.10.
Foreign institutional investors offloaded equities worth Rs 583.36 crore on a net basis on Thursday, according to exchange data.
