Rupee Strengthens But Remains Above 84 As Outflow In Stocks Persists

The Indian rupee opened stronger against the US Dollar on Friday amid a continuing selloff in domestic stocks and is likely to remain in a tight range, according to analysts.

The domestic currency opened 2 paise higher against the US dollar at 84.05 on Friday, according to Bloomberg data. The Indian unit closed at 84.07 against the greenback on Thursday.

Foreign investors sold Indian stocks for the 14th consecutive day amid rising concerns about a slowing economy and the valuation the stocks are quoted at. 

In the last 12 sessions, foreign institutional investors have offloaded domestic stocks worth over Rs 85,700 crore, according to provisional data from the National Stock Exchange.

The rupee appears to be moving within a tight range, with external pressures hindering any significant appreciation, according to Amit Pabari, managing director, CR Forex Advisors. On the domestic front, FIIs continue to pull funds due to concerns over an overvalued Indian equity market.

"However, there are positive signs as well—India's trade balance has improved, and inflows from upcoming IPOs are expected to lend some support to the Rupee."

Crude oil prices were poised for increased volatility as tension escalated in West Asis with Israel killing Hamas leader Yahya Sinwar—the mastermind of last year’s Oct. 7 assault—in southern Gaza.

Brent crude was trading 0.21% higher at $74.61 a barrel as of 9:41 p.m. The US Dollar Index was down 0.12% at $103.70 at 9:14 a.m.

Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said, "The opening looks almost flat with a close watch on RBI who has been selling near 84.09 for now."

For now, the USDINR faces strong resistance in the 84.10-84.20 range, with potential to drift toward the 83.80 level, Pabari said.