The Indian rupee closed stronger against the US dollar on Thursday, as the Indian benchmarks—the Nifty and the Sensex—hit a fresh record high, supported by overseas inflows, among others. The slight easing in both the greenback and Brent crude oil prices also supported the rupee.
The local currency strengthened 11 paise to close at Rs 83.46. It had opened at Rs 83.52 against the greenback, according to Bloomberg. It had ended at Rs 83.57 on Wednesday.
The dollar index was at $105.87, whereas Brent crude was at $84.95 a barrel, according to Bloomberg.
"The Indian equity markets are trading at all-time highs. This is supported by positive FPI flows, which have amounted to $3.91 billion in June to date," said Amit Pabari, managing director of CR Forex Advisors. "As the Indian bonds are set to join the JPMorgan Emerging Market Bond Index on June 28, this inclusion will attract inflows of approximately $25 billion into Fully Accessible Route bonds over the next 10 months."
Further, RBI Governor Shaktikanta Das has said that India is on the verge of a major structural shift in its growth trajectory, moving towards sustained 8% GDP growth. Additionally, the Indian Economic Advisory Council predicts that India will become a $4 trillion economy by 2025, surpassing Japan to become the world's fourth-largest economy by early next fiscal. This positive economic outlook also supports the rupee.
"The rupee is expected to remain stable and gradually move towards the lower end of the range of Rs 83.10–83.70, with Rs 83.20–83.10 remaining in the buying zone and Rs 83.50–83.70 as the selling zone," Pabari said.
For the day, all eyes are on the US gross domestic product data due later in the day.
The domestic currency is "expected to remain in narrow range of Rs 83.50-83.60". "Market awaits for Trump-Biden debate today, personal consumption expenditures price index data and JP Morgan Index inclusion of India in its Emerging market Index tomorrow," said Anil Kumar Bhansali, Head of Treasury and executive director of Finrex Treasury Advisors LLP.
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