Mumbai, February 23: The Indian rupee strengthened by 7 paise to settle at 90.87 against the US dollar on Monday, supported by a sharp decline in global crude oil prices and a softer US dollar amid renewed global trade-related uncertainties.
Despite the gains, persistent foreign fund outflows and geopolitical concerns capped further appreciation in the local currency, according to forex traders.
Rupee Trades in Narrow Range During Session
At the interbank foreign exchange market, the rupee opened at 90.76 and moved within a range of 90.67 to 90.89 against the greenback during the session. It eventually settled at 90.87 on a provisional basis, marking a recovery from Friday’s close of 90.94, when the currency had plunged 26 paise.Market participants noted that while the rupee touched an intraday high of 90.67, it was unable to sustain momentum as domestic equities retreated from early gains due to rising debt yields. The dollar saw buying interest from importers and foreign portfolio investors whenever it dipped, limiting further strengthening of the rupee.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said the rupee is expected to trade in the range of 90.60 to 91.00 in the near term.
Dollar Index and Crude Oil Prices Weigh on Currency Movement
The dollar index, which tracks the US dollar against a basket of six major currencies, was trading 0.32 percent lower at 97.47.Brent crude, the global oil benchmark, declined 0.39 percent to USD 71.49 per barrel. Lower crude oil prices typically support the Indian rupee, as India is a major oil importer and reduced import bills ease pressure on the current account.
Domestic Equities End Higher
On the domestic equity front, the benchmark indices closed in positive territory. The Sensex rose 479.95 points to settle at 83,294.66, while the Nifty advanced 141.75 points to close at 25,713.However, foreign institutional investors remained net sellers, offloading equities worth Rs 934.61 crore on Friday, as per exchange data.
India Forex Reserves Hit Record High
In a positive macroeconomic development, India’s foreign exchange reserves surged by USD 8.663 billion to reach a new all-time high of USD 725.727 billion for the week ended February 13, according to data released by the Reserve Bank of India on Friday.The build-up in forex reserves provides a cushion against external volatility and strengthens the country’s ability to manage currency fluctuations amid global uncertainties.
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