The Indian rupee strengthened against the US dollar by 6 paise, closing at 83.04 on Wednesday. This upward trend was supported by a positive performance in the domestic equity market. However, market participants remained cautious ahead of the interim Budget, scheduled for February 1. Additionally, the rupee’s gain was capped by the strengthening US dollar in the international market.
At the interbank foreign exchange market, the rupee opened at 83.11 against the dollar and reached an intraday low of 83.12 and a high of 83.01. Ultimately, it settled at 83.04, marking an increase of 6 paise from the previous close.
Anuj Choudhary, a Research Analyst at Sharekhan by BNP Paribas, attributed the rupee’s rise to positive domestic markets and expectations of fresh foreign institutional investor (FII) inflows. However, he noted that the strong dollar, as well as rising global crude oil prices, may dampen the currency’s performance. Choudhary also highlighted the importance of monitoring India’s fiscal deficit, US ADP non-farm employment data, and Chicago PMI data.
Investors are advised to exercise caution ahead of the US Federal Open Market Committee (FOMC) meeting and the Union Budget (Vote on Account). The upcoming speech by Fed Chair Jerome Powell is expected to provide insights into the timing of rate cuts. Choudhary projected that the spot price of USD/INR would range between Rs 82.80 and Rs 83.40.
In terms of global market indicators, the dollar index, which measures the dollar against a basket of six currencies, was trading 0.10 percent higher at 103.49. Meanwhile, Brent crude futures, the global oil benchmark, fell 1.03 percent to USD 82.02 per barrel.
On the domestic equity market front, the Sensex rose by 612.21 points or 0.86 percent to reach 71,752.11 points, while the Nifty increased by 203.60 points or 0.95 percent, closing at 21,725.70 points.
Foreign institutional investors (FIIs) were net sellers in the capital markets on Tuesday, offloading shares worth Rs 1,970.52 crore.
Overall, the rupee’s upward movement was driven by positive domestic market conditions and expectations of fresh FII inflows. However, factors such as the strong dollar, rising crude oil prices, and upcoming economic indicators should be closely monitored in the coming days.
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