The Indian rupee rose by 9 paise to 95.65 against the US dollar in early trade on Friday, bolstered by the weakening of the American currency in overseas markets.
At the interbank foreign exchange, the rupee opened at 95.69 before rising to 95.65, marking an increase of 9 paise from its previous close. On Thursday, the currency had pared initial gains to settle down 1 paisa at 95.74 against the dollar.
Forex traders noted that while a softer dollar offers support, the advantage is being offset by elevated crude oil prices, persistent geopolitical uncertainty, and a structurally reduced foreign presence that continues to neutralise fresh dollar inflows.
Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, traded lower by 0.15 per cent at 98.74, hitting its lowest level since May. Brent crude, the global oil benchmark, traded lower by 0.23 per cent at $93.56 per barrel in futures trade amid ongoing tensions in West Asia and fresh warnings from US President Donald Trump to countries supporting Iran.
According to CR Forex Advisors MD Amit Pabari, the conflict has disrupted over 20 per cent of the region's refining capacity, while the Strait of Hormuz remains shut, restricting fuel exports from a vital energy route.
Regarding foreign exchange reserves and inflows, RBI Governor Sanjay Malhotra indicated that the central bank expects at least $80 billion of foreign currency inflows from measures announced earlier this year. Amit Pabari noted that approximately $56.85 billion has been mobilised so far, including $52.3 billion through FCNR(B) deposits. However, unlike the FCNR(B) scheme of 2013, which sparked an immediate double-digit appreciation, this year's inflows have not translated into meaningful currency strength since the RBI announced the measures in June.
On the domestic market front, the Sensex traded lower by 25.97 points at 77,506.51 in early trade, while the Nifty slipped 5.75 points to 24,223.10. Exchange data showed that foreign institutional investors offloaded equities worth ₹583.36 crore on a net basis on Thursday.
"The modest appreciation of the rupee in early trade reflects the competing pressures currently influencing the Indian financial markets. While overseas dollar weakness provides some relief, macroeconomic factors such as elevated crude oil prices, geopolitical tensions, and net equity outflows by foreign institutional investors continue to exert a balancing effect. For businesses and startups operating in cross-border markets, monitoring these currency movements alongside global energy trends remains critical for managing financial exposure and operational planning." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
