Rupee rallies: Gains 26 paise against US dollar on strong foreign inflows and weak dollar
Forex traders noted that encouraging macroeconomic data, combined with the 90-day relief from US reciprocal tariffs, spurred foreign investors to buy into domestic equities, which in turn boosted the local currency.
Mumbai: The rupee stayed firm and appreciated 26 paise to 85.54 against the US dollar in early trade on Wednesday on the back of a massive inflow of foreign capital, a weak American currency and lower crude oil prices.
Forex traders said the positive macroeconomic numbers that came on the heels of the 90-day reprieve from US reciprocal tariffs fuelled buying in domestic equities by foreign investors, adding strength to the local currency.
At the interbank foreign exchange, the domestic unit opened strong at 85.66 and gained further to trade at 85.54 against the greenback in initial deals, 26 paise higher from the previous closing level.
The rupee had closed Tuesday’s session with a gain of 30 paise at 85.80 against the dollar. It had risen sharply by 58 paise in the preceding session on Friday.
Forex markets were closed on Monday on account of Dr Baba Saheb Ambedkar Jayanti.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.47 per cent at 99.49, a level seen on March 1, 2022.
Brent crude, the global oil benchmark, declined 0.36 per cent to its four-year low of USD 64.44 per barrel in futures trade. The crude had earlier hit this level in April 2021.
In the domestic equity market, the 30-share BSE Sensex fell by 118.02 points, or 0.15 per cent, to 76,616.87, while the Nifty declined 41.10 points, or 0.18 per cent, to 23,287.45. Both the indices had closed Tuesday’s session over 2 per cent higher.
Foreign institutional investors (FIIs) bought equities worth Rs 6,065.78 crore on a net basis on Tuesday, according to exchange data.
The latest government data released on Tuesday showed wholesale price inflation in the country declined to a 6-month low of 2.05 per cent in March as prices of vegetables, potato and other food items eased.
Retail inflation dipped marginally to a nearly six-year low of 3.34 per cent in March due to a decline in the prices of vegetables and protein-rich items.
Another set of data showed India’s exports turned positive after four months, recording a marginal 0.7 per cent increase to USD 41.97 billion in March, while overall exports of goods and services have crossed an all-time high of USD 820 billion in the last fiscal year despite global economic uncertainties.
