Rupee gains 4 paise to 84.71 against US dollar amid positive equity market cues

Representational Pic

The Indian rupee opened on a flat note in early trade on Thursday, rising just 4 paise to 84.71 against the US dollar. This modest recovery from its record low of 84.75 on Wednesday was primarily due to positive domestic equity market trends, although it was tempered by the broad strength of the US dollar in global markets.

At the interbank foreign exchange market, the rupee began at 84.72 and moved within a tight range, eventually touching 84.71, showing a slight gain of 4 paise over its previous closing value of 84.75. On Wednesday, the rupee had slipped by 7 paise to hit its lowest-ever closing level against the greenback, raising concerns about the currency's continued weakness.

Forex traders noted that the rupee is likely to remain under pressure in the near term. A strong US dollar and rising crude oil prices are expected to keep the currency market volatile. Experts suggested that these factors could hinder the rupee's performance against the US dollar, as demand for the greenback remains robust globally, compounded by the impact of high oil prices on India's import bill.

Looking ahead, market participants are closely monitoring the Reserve Bank of India's (RBI) upcoming monetary policy meeting scheduled for December 6. Analysts believe that the central bank's stance on inflation and growth will be key to shaping market sentiment. A balanced policy approach could help boost investor confidence and potentially attract fresh inflows.

Amit Pabari from CR Forex Advisors highlighted that the RBI's decision could enhance the appeal of emerging markets like India. This, coupled with expectations that the US Federal Reserve may move towards rate cuts in 2025, could ease liquidity constraints and improve the outlook for the rupee. Additionally, stabilising Foreign Institutional Investor (FII) flows could provide further support to the Indian currency, enabling the RBI to increase its interventions in the foreign exchange market.

Meanwhile, the dollar index, which measures the greenback's strength against a basket of six major currencies, was trading slightly lower by 0.05% at 106.26. Brent crude, the global benchmark, rose by 0.10% to USD 72.38 per barrel in futures trade, contributing to the pressure on the rupee.

On the domestic front, the equity market showed positive movement. The benchmark 30-share BSE Sensex gained 49.20 points, or 0.06%, reaching 81,005.53 points, while the Nifty index rose by 47.85 points, or 0.2%, to 24,515.30 points. Notably, Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Wednesday, purchasing shares worth Rs 1,797.60 crore, according to exchange data. PTI reports.

(With inputs from PTI)