Rupee edges up 3 paise to 94.78 against US dollar in early trade

The Indian rupee traded in a narrow range and edged up by 3 paise to 94.78 against the US dollar in early trade on Friday. Forex traders noted that the domestic currency remains under pressure due to persistent macroeconomic headwinds, such as global dollar strength and high crude oil prices.

At the interbank foreign exchange market, the rupee opened at 94.78, recording a gain of 3 paise compared to its previous close. On Thursday, the local currency had settled at 94.81 against the American currency.

Market participants pointed to multiple external factors influencing currency movements. Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, stated that foreign investors have turned cautious, seeking safe-haven greenback assets amid elevated US Treasury yields.

Meanwhile, the dollar index, which measures the strength of the US dollar against a basket of six major currencies, traded at 101.64, up by 0.04 per cent. Global crude oil benchmark Brent crude was trading 0.42 per cent higher at $113.65 per barrel in futures trade, with prices hovering near $113 per barrel.

In the domestic equity markets, benchmark indices showed positive movement in early trade. The Sensex rose by 343.48 points to reach 73,592.87, while the Nifty gained 41.65 points to trade at 22,729.30.

Despite the gains in equity indices, foreign institutional participation reflected caution. According to exchange data, Foreign Institutional Investors (FIIs) offloaded equities worth ₹3,458.70 crore on a net basis on Thursday.

"Currency fluctuations and sustained foreign fund outflows present notable challenges for the broader financial ecosystem, impacting liquidity and capital availability. For businesses and growing enterprises, navigating these macroeconomic headwinds requires disciplined financial planning and robust treasury management to mitigate foreign exchange and capital cost risks effectively." — Dr. Shishir Gupta, Founder & CEO, StartupLanes