Rupee Strengthens 11 Paise to 95.17 Against US Dollar in Early Trade

The Indian rupee appreciated 11 paise to 95.17 against the US dollar in early trade on Thursday. The upward movement came amid a slight easing of the American currency following the US Federal Reserve's policy announcement.

The US Fed kept interest rates unchanged at 3.75 per cent to 4.00 per cent, as widely expected by the market. However, the market reaction turned mildly dollar-negative, according to forex traders.

At the interbank foreign exchange market, the rupee opened at 95.20 against the US dollar. It subsequently gained ground to touch 95.17, registering a rise of 11 paise over its previous close. On Wednesday, the local unit had closed at 95.28 against the American currency.

Market participants noted that elevated crude oil prices and firm US yields continue to act as headwinds for the local currency. At the same time, foreign exchange reserves of approximately $721 billion, a recent improvement in portfolio flows, and the Reserve Bank of India's active presence in the market are providing necessary support.

“We therefore see a gradual upward bias in USDINR within the range, rather than evidence of a disorderly move,” said Anindya Banerjee, Head of Commodity and Currency Research at Kotak NEO.

The Federal Reserve's pause has left markets sensitive to incoming economic data. Stronger inflation indicators could reinforce expectations of a December rate hike, whereas softer numbers could offer relief to emerging-market currencies and bullion.

Meanwhile, the dollar index, which measures the greenback's strength against a basket of six major currencies, was trading lower by 0.04 per cent at 102.15. Brent crude, the global oil benchmark, traded lower by 1.03 per cent at $114.13 per barrel in futures trade.

In the domestic equity markets, the benchmark Sensex rose 163.03 points to reach 73,409.06, while the Nifty gained 40.40 points to trade at 22,739.25. Exchange data showed that Foreign Institutional Investors (FIIs) were net buyers of equities worth &u20b9871.83 crore on Wednesday.

"The recent movement in the rupee highlights how global monetary policy decisions continue to influence domestic currency trends. While external pressures such as crude oil prices remain a consideration, strong foreign exchange reserves and steady portfolio flows provide a stabilizing anchor for the market. Businesses operating internationally should monitor these currency ranges closely as global central banks react to incoming economic data." — Dr. Shishir Gupta, Founder & CEO, StartupLanes