Rupee Gains in Early Trade After Monday’s Sharp Fall
The Indian rupee rebounded from its record low in early trading on Tuesday, strengthening by 7 paise to 92.14 against the US dollar. The recovery came after global crude oil prices declined following comments from US President Donald Trump suggesting that the ongoing conflict with Iran could end soon.A weaker US dollar and a strong opening in the domestic equity markets also supported the local currency. However, persistent foreign fund outflows limited the rupee’s gains, according to forex traders.
At the interbank foreign exchange market, the rupee opened at 91.92 before settling at 92.14, marking a modest recovery from its previous close.
Rupee Had Hit Record Low in Previous Session
On Monday, the rupee had dropped sharply to an all time low of 92.21 against the US dollar. The currency lost 39 paise during the session as global crude oil prices surged and the US dollar strengthened.The spike in oil prices had intensified pressure on the domestic currency, which is sensitive to energy import costs.
Oil Prices Ease After Strategic Reserve Move
According to market participants, the easing of crude oil prices provided relief to the rupee.Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said the rupee had weakened significantly in the previous session but found support after oil prices cooled.
He noted that prices declined after the G7 countries decided to use their strategic reserves to release oil into the market to bring down prices.
Bhansali added that Brent crude prices softened during Asian trading after Trump indicated the conflict could end once certain objectives were achieved. He also mentioned the possibility of easing sanctions on Russia and other steps aimed at stabilizing oil markets.
He expects the rupee to trade within a range of 91.50 to 92.10 in the near term.
Crude Oil and Dollar Index Movement
Brent crude, the global oil benchmark, was trading 4.69 percent lower at USD 94.32 per barrel in futures trade during Asian hours.At the same time, the dollar index, which measures the US dollar’s strength against a basket of six major currencies, declined 0.26 percent to 98.92.
Domestic Markets Support Currency
Indian equity markets opened sharply higher, lending additional support to the rupee.The BSE Sensex surged 809.57 points to 78,375.73, while the NSE Nifty climbed 252.75 points to 24,280.80 in early trading.
Foreign Investors Continue to Sell
Despite the rupee’s recovery, foreign institutional investors remained net sellers in the equity market. Exchange data showed that overseas investors sold shares worth Rs 6,345.57 crore on a net basis on Monday.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
The information provided is for general informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Readers are advised to rely on their own assessment and judgment and consult appropriate financial advisers, if required, before taking any investment-related decisions.