Rupee rises 7 paise to 93.70 against US dollar in early trade

The Indian rupee appreciated by 7 paise to 93.70 against the US currency in early trade on Wednesday, driven by a steady return of foreign capital, softer crude oil prices, and improving geopolitical sentiment.

In the interbank foreign exchange market, the rupee opened at approximately 93.71 before touching 93.70, marking an increase of 7 paise from its previous closing level on Monday. Domestic equity, currency, and debt markets remained closed on Tuesday due to 'Diwali Balipratipada'. On Monday, the rupee had appreciated by 21 paise to close at 93.77 against the US dollar.

Forex traders noted that foreign investors are gradually returning to the domestic market following months of cautious participation and substantial capital outflows. Exchange data showed that foreign institutional investors (FIIs) purchased equities worth Rs 7,212.22 crore on Monday.

Driven by factors such as an AI-led sell-off in global markets, strong domestic earnings growth, and attractive large-cap valuations, foreign investors turned net buyers of Indian equities in November. Data from depositories indicate an infusion of Rs 53,739 crore in the first nine days of the month, following consecutive outflows of Rs 35,861 crore in September and Rs 34,843 crore in October.

Commenting on the currency's trajectory, CR Forex Advisors MD Amit Pabari stated that the rupee's underlying momentum remains positive, backed by steady foreign capital inflows, softer crude prices, and improving geopolitical sentiment. He added that if these supportive factors persist, the USD/INR pair could extend its decline towards 93.50, with 93.00 acting as the next important level to watch.

Meanwhile, the dollar index, which measures the greenback against a basket of six major currencies, traded higher by 0.03 percent at 102.26. Brent crude, the global oil benchmark, traded 1.01 percent higher at USD 92.41 per barrel in futures trade.

Anindya Banerjee, Head of Commodity and Currency Research at Kotak NEO, noted that cheaper oil offers support to the rupee through a lower import bill, while higher US yields and a stronger dollar create opposing pressure. Banerjee added that India's upcoming inflation data release on Thursday will serve as the next crucial domestic policy signal.

"The recent appreciation of the rupee, supported by returning foreign institutional investments and stabilizing crude oil prices, reflects improving macroeconomic sentiment. However, businesses must remain watchful of external pressures such as global yields and upcoming domestic inflation figures, which will dictate short-term currency movements and market stability." — Dr. Shishir Gupta, Founder & CEO, StartupLanes