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Indian Rupee Strengthens Against US Dollar: A Comprehensive Update

The Forex market was closed on Wednesday due to a holiday declared by the Maharashtra government | (Photo: Shutterstock)

Market Overview

In an encouraging turn of events for the Indian currency, the rupee has maintained its upward trajectory for the third consecutive session. As of Friday morning, the rupee gained an impressive 9 paise, trading at 83.56 against the US dollar. This rise can be attributed to a robust domestic equity market, which has been buoyed by investor confidence, along with a weakening of the American dollar.

The rupee’s growth is also supported by a decrease in crude oil prices, although analysts indicate that some outflow of foreign funds has slightly dampened the currency’s performance. This balance of factors leads to fluctuations in the Forex market that traders need to keep a close eye on.

Intraday Trading Insights

At the interbank foreign exchange market, trading commenced with the rupee opening at 83.63. However, it soon gained strength, moving to 83.56 against the dollar, showing a notable increase of 9 paise from its previous closing level. The local unit previously gained 11 paise to settle at 83.65 against the US dollar on Thursday and climbed 10 paise higher the preceding Tuesday.

Market Closure and Economic Impact

It is worth noting that the Forex market was closed on Wednesday due to a public holiday declared by the Maharashtra government, which temporarily suspended trading activities.

On a broader scale, the dollar index, which reflects the strength of the dollar against a basket of six major currencies, saw a slight dip of 0.07 percent to register at 100.24. Analysts attribute this decline to recent actions taken by the US Federal Reserve, which has lowered the benchmark interest rate by 0.50 percent. This shift in monetary policy has redirected the focus of investors toward emerging market currencies, further influencing the rupee’s performance.

Crude Oil and Stock Market Trends

Adding to the positive momentum for the rupee, Brent crude, the internationally recognized oil benchmark, saw a decline of 0.19 percent to settle at $74.74 per barrel in futures trading. This reduction is beneficial for the Indian economy, primarily reliant on crude imports, as lower oil prices can lead to improved trade balances and currency valuations.

In the domestic equity space, the 30-share BSE Sensex experienced a surge, rising by 238.10 points, or 0.29 percent, to reach an impressive 83,422.90. Similarly, the Nifty index advanced by 84.45 points, or 0.33 percent, to settle at 25,500.25. Both of these indices achieved new all-time highs on Thursday, showcasing strong investor sentiment.

However, the activity in the capital markets should also be noted, as Foreign Institutional Investors (FIIs) were net sellers on Thursday, offloading shares worth Rs 2,547.53 crore according to exchange data. This selling pressure from FIIs remains a potential concern for future market dynamics.

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Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.

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