Rupee Closes Higher at 90.69 Against US Dollar, Gains 5 Paise on Equity Strength and Softer Crude

Rupee Closes Higher at 90.69 Against US Dollar, Gains 5 Paise on Equity Strength and Softer Crude​

The Indian rupee strengthened on Tuesday, closing 5 paise higher at 90.69 against the US dollar on a provisional basis. The domestic currency drew support from firm equity markets and easing global crude oil prices, although persistent foreign fund outflows and a stronger dollar capped further gains.

Rupee Trades in Narrow Band During Session​

In the interbank foreign exchange market, the rupee opened at 90.72 against the greenback. Throughout the trading session, it moved within a limited range, touching an intraday high of 90.64 and a low of 90.78.

The unit ultimately settled at 90.69, improving by 5 paise from Monday’s closing level of 90.74, when it had declined by 8 paise.

Dollar Index and Crude Oil Influence Currency Movement​

The dollar index, which measures the US dollar’s strength against a basket of six currencies, was trading 0.22 percent higher at 97.03. A firm dollar typically puts pressure on emerging market currencies, including the rupee.

Meanwhile, Brent crude, the global oil benchmark, was down 0.83 percent at USD 68.08 per barrel in futures trade. Lower crude prices tend to support the rupee by easing concerns over India’s import bill.

Equity Market Gains Offer Support​

On the domestic equities front, benchmark indices ended higher, lending support to the local currency.

The BSE Sensex advanced 173.81 points, or 0.21 percent, to close at 83,450.96. The NSE Nifty rose 42.65 points, or 0.17 percent, to settle at 25,725.40.

However, foreign institutional investors continued to pare exposure, offloading equities worth Rs 972.13 crore on Monday, as per exchange data.

Trade Data Highlights External Sector Trends​

Government data released on Monday showed that India’s exports rose marginally by 0.61 percent to USD 36.56 billion in January.

At the same time, the trade deficit widened to a three month high of USD 34.68 billion. Imports climbed 19.2 percent, the highest so far this fiscal, to a three month high of USD 71.24 billion. The increase was driven by a sharp rise in inbound shipments of gold and silver amid higher prices.

With global cues, foreign fund flows, and key US data releases in focus this week, currency markets are expected to remain sensitive to external developments.