The rupee rises 12 paise to 94.72 against the US dollar in early trade on Tuesday. The Indian currency gained support from falling crude oil prices and foreign fund inflows into domestic equities.
However, a stronger US dollar ahead of the crucial US midterm election kept global investors cautious. This limited the rupee's gains, according to forex traders.
At the interbank foreign exchange market, the rupee opened at 94.68 against the dollar. It strengthened further to 94.60 before trading at 94.72, gaining 12 paise from its previous close.
The Indian currency had declined 8 paise to close at 94.84 against the US dollar on Monday. This came after it appreciated 50 paise in the previous trading session on Friday.
Key Highlights
- The rupee gained 12 paise to trade at 94.72 against the US dollar.
- Brent crude traded at USD 104.76 per barrel, while the dollar index stood at 101.65.
- Foreign Institutional Investors purchased equities worth Rs 3,114.68 crore on Monday.
Crude Oil Prices and Dollar Movement Influence Rupee
The rupee rises amid easing crude oil prices, which offered some relief to the domestic currency. Brent crude, the global oil benchmark, was trading 0.01 per cent lower at USD 104.76 per barrel in futures trade.
Analysts attributed the decline in crude prices to fresh talks between Iranian and Qatari officials. These discussions raised hopes of a possible resolution to the West Asia war and greater stability in global energy supplies.
Lower crude prices are generally positive for India, as the country depends heavily on imported oil to meet its energy requirements. Reduced oil import costs can help ease pressure on the country's foreign exchange outflows.
Meanwhile, the dollar index, which measures the US dollar against a basket of six major currencies, traded 0.03 per cent higher at 101.65. The stronger greenback continued to weigh on the Indian currency. Investors remained cautious ahead of the crucial US midterm election.
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Sensex, Nifty Rally as FIIs Continue Buying
Domestic equity markets opened higher on Tuesday, supporting overall market sentiment. The BSE Sensex surged 551.77 points, or 0.73 per cent, to 76,244.55 in early trade.
The NSE Nifty also gained 129.60 points, or 0.55 per cent, to reach 23,570.40. Foreign Institutional Investors (FIIs) remained net buyers for the second consecutive trading session on Monday. They purchased domestic equities worth Rs 3,114.68 crore on a net basis, according to exchange data.
Continued foreign fund inflows supported domestic market sentiment and provided another positive factor for the Indian currency. The rupee rises as lower crude oil prices and foreign investment inflows offer support. However, the strength of the US dollar remains a key factor limiting further gains against the greenback.
