Rupee Gains 14 Paise as Sensex Jumps Amid Escalating West Asian Tensions
The Indian rupee witnessed a modest recovery in early trade on Friday, gaining 14 paise to settle at 96.28 against the US dollar. This appreciation follows a four-day depreciation streak where the currency shed 17 paise to reach 96.42 on Thursday.Market participants noted that while domestic equity markets provided a positive tailwind for the local unit, several global headwinds capped the upside potential. Heavy foreign institutional investor (FII) outflows and elevated crude oil prices continue to exert pressure on the rupee's trajectory.
Geopolitical Friction and Safe-Haven Demand in West Asia
The currency remained under pressure as US airstrikes expanded against Iranian infrastructure, specifically targeting bridges to pressure Tehran regarding the Strait of Hormuz. Iran responded by launching new missile attacks against US-allied nations, signaling a potential escalation in regional conflict.These deepening geopolitical uncertainties have sustained significant demand for safe-haven assets. Consequently, investors remain cautious toward emerging-market currencies, including the rupee, as volatility in West Asia persists.
Impact of Oil Prices and Dollar Index Strength
Brent crude remains a critical factor for the domestic currency, with the global oil benchmark trading 0.39 per cent higher at USD 84.83 per barrel in futures trade. High energy costs generally weigh on the rupee, especially as crude prices remain anchored near the USD 85 per barrel mark.The dollar index, which measures the greenback's strength against a basket of six major currencies, also showed resilience by trading marginally up 0.02 per cent at 100.78. Traders expect the rupee to navigate a range of 96.00-96.50 today, though the outlook leans toward a downside bias due to these persistent pressures.
Domestic Equity Performance and FII Activity
On the domestic front, the Sensex surged 480.95 points to reach 77,656.56 in early trading on Friday. The Nifty also saw a healthy jump of 125.05 points, reflecting a robust opening for Indian equities despite the volatile global backdrop.However, data from exchanges reveal that Foreign Institutional Investors offloaded equities worth Rs 4,205.56 crore on a net basis during Thursday's session. This sustained selling pressure from foreign entities remains a key variable for currency stability in the coming sessions.
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