On Thursday, the Indian rupee closed higher against the US dollar for the seventh consecutive session, despite the fact that the Dollar index rose alongside crude oil prices.
According to Bloomberg data, the domestic currency closed 6 paise higher at 86.37 against the dollar, up from 86.43 on Wednesday. The rupee closed higher for the seventh consecutive day, its longest winning streak since March 24 of last year. So far in March, the currency has risen by 1.20 percent, mirroring the decline in the dollar index. Meanwhile, during the current fiscal year, it fell by 3.4%.
According to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, the Reserve Bank of India's decision to allow the rupee to appreciate could be because the regulator also asked banks to reduce long arbitrage positions in non-deliverable forwards.
Foreign institutional investors sold ₹1,096.5 crore of Indian equities. Global funds have withdrawn ₹1.46 trillion from domestic stocks this year.
"The USD-INR pair is expected to trade between 86.00 and 86.80 in the near term," Amit Pabari, managing director of CR Forex Advisors, stated. With FII outflows and liquidity deficit conditions persisting, he expects a slight rebound to 86.50-86.60.
Citing President Donald Trump's policies as one factor contributing to the resurgence of inflation, US Federal Reserve Chair Jerome said there is still opportunity to lower interest rates later this year.
At 103.89, the dollar index, which gauges the value of the US dollar in relation to a basket of other currencies, increased by 0.45 percent. The dollar index is predicted to stay range-bound between 103 and 104 in the near future due to the Fed's stance, which kept the US dollar strong. However, expectations of rate cuts in 2025 may limit further gains, with a move to 102 levels possible if economic conditions soften, according to Pabari.
Brent crude oil was up 0.35 percent to $71.03 per barrel on Thursday, while WTI crude was up 0.77 percent to 67.68 per barrel as of 3:20 PM IST. Powell acknowledged the uncertainty surrounding Trump's policies.
