Rupee Ends Slightly Higher Against US Dollar as Weak Greenback and Lower Crude Support Sentiment

Mumbai Trading Session Overview​

The Indian rupee recovered from intraday lows and closed marginally stronger against the US dollar on Monday, supported by weakness in the American currency and a decline in global crude oil prices. Improved sentiment in domestic equities also aided the recovery, although ongoing geopolitical uncertainty limited sharper gains.

Intraday Currency Movement​

In the interbank foreign exchange market, the rupee opened at 90.23 against the US dollar. During the session, it strengthened to an intraday high of 90.13 but also touched a low of 90.25. The domestic currency finally settled at 90.17, marking a gain of 1 paisa from the previous close.

In the previous session on Friday, the rupee had weakened sharply, closing 28 paise lower at 90.18 against the US dollar.

Global and Domestic Factors at Play​

The rupee opened on a weak note amid risk aversion in global markets and heightened geopolitical tensions. However, sentiment improved after comments from the new US envoy to India indicated active engagement between India and the United States on finalising a trade deal. This helped the domestic currency recover alongside a rebound in local equity markets.

Market participants remained cautious ahead of key macroeconomic data releases from both India and the United States scheduled later this week, which kept the rupee’s movement largely range-bound.

Dollar Index and Crude Oil Trends​

The dollar index, which tracks the strength of the US dollar against a basket of six major currencies, was trading 0.34 percent lower at 98.55. Lower crude prices also provided some relief to the rupee, with Brent crude futures trading 0.28 percent lower at USD 63.16 per barrel.

Equity Market Performance​

Domestic equities ended the session on a positive note. The benchmark Sensex rose 301.93 points, or 0.36 percent, to close at 83,878.17, while the Nifty advanced 106.95 points, or 0.42 percent, to settle at 25,790.25.

Foreign institutional investors remained net sellers, offloading equities worth Rs 3,638.40 crore during the session, according to exchange data.

India’s Forex Reserves Update​

Data released by the Reserve Bank of India showed that India’s foreign exchange reserves declined by USD 9.809 billion to USD 686.801 billion for the week ended January 2. In the preceding week, reserves had increased by USD 3.293 billion to USD 696.61 billion.

The movement in reserves and upcoming macroeconomic cues are expected to remain key factors influencing the rupee in the near term.