Rupee Strengthens 52 Paise to Close at 93.89 Against US Dollar

The Indian rupee advanced 52 points to settle provisionally at 93.89 against the US dollar on Friday. Market participants noted that a softer US dollar, falling crude oil prices, and reduced concerns regarding import costs helped improve overall investor sentiment during the session.

At the interbank foreign exchange market, the domestic unit opened the day at 94.50. During trading hours, it touched an intraday high of 93.82 and a low of 94.50 before ending the session at 93.89, registering a gain of 52 paise compared to its previous close. In the prior session on Thursday, the rupee had settled 5 paise higher at 94.41 against the greenback.

Forex traders pointed out that a strong performance in domestic equity markets and fears of a slowdown in artificial intelligence spending also provided support to the domestic currency. Meanwhile, the dollar index, which measures the greenback against a basket of six major currencies, traded higher by 0.49 per cent at 102.04. Brent crude futures, the global oil benchmark, traded up by 2.04 per cent at $100.30 per barrel.

Domestic equity indices posted strong gains during the session. The BSE Sensex jumped 1,718.01 points to close at 81,028.02, while the NSE Nifty surged 493.75 points to end at 25,030.35. According to exchange data, foreign institutional investors (FIIs) were net buyers on Thursday, purchasing equities worth ₹14,974.68 crore.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, stated that the rupee is expected to trade with a positive bias moving forward, driven by the strength in domestic markets and rising foreign institutional investor inflows. He also noted that weakness in the dollar following the US mid-term elections and a decline in US Treasury yields could provide additional support.

However, analysts cautioned that ongoing geopolitical tensions, including the conflict between Ukraine and Russia and military attacks in the Middle East, could limit sharp upward movements for the currency. Traders are also closely monitoring upcoming economic data releases, including the non-farm payrolls report from the United States, with the USD/INR spot price expected to trade within a range of 93.65 to 94.20.

"The appreciation of the rupee, supported by robust domestic equity performance and strong foreign institutional investor inflows, reflects positive short-term sentiment in the macroeconomic environment. However, businesses must remain cautious of external volatilities such as fluctuating crude oil prices and ongoing geopolitical tensions, which continue to pose risks to currency stability and import costs." — Dr. Shishir Gupta, Founder & CEO, StartupLanes