Rupee Shrugs Monday Blues, Closes Stronger Against US Dollar
The Rupee appreciated by 19 paise during the day to 84.26.
The Indian Rupee ended 17 paise stronger against the US dollar at 84.28. The Rupee appreciated by 19 paise during the day to 84.26.
The Indian rupee started the week on a positive note on Monday morning, strengthening by 8 paise against the US dollar to open at 84.37.
On Friday, the domestic currency had faced some pressure earlier in the day, but managed to appreciate by 5 paise, closing at 84.45, compared to its opening rate of 84.49 against the greenback. Despite the slight recovery, the rupee had hit a fresh record low of 84.50 in a previous session, weighed down by foreign investor outflows from Indian equities.
Global funds offloaded Rs 5,321 crore worth of Indian stocks on Thursday, increasing the net selling tally to Rs 1.65 lakh crore over the past 37 sessions. Adding to the pressure on the rupee were rising geopolitical tensions, especially amid the ongoing Russia-Ukraine conflict. The escalation of the war has further strained market sentiment and affected currencies globally.
Despite the ongoing challenges, the Reserve Bank of India has actively stepped in to limit the rupee's depreciation, including interventions in the Non-Deliverable Forward market to sell dollar and stabilise the domestic currency.
While the rupee has a promising chance for further appreciation, certain global and domestic factors could limit its gains, according to Amit Pabari, managing director of CR Forex Advisors. The strengthening US dollar, driven by robust US economic data and Europe’s economic weakness, along with a nearly 5% surge in oil prices due to the Russia-Ukraine conflict, could strain India’s trade balance.
"The USDINR pair is anticipated to trade within a defined range in the medium term, with support at 83.80 and resistance around 84.50. The overall bias, however, tilts toward the downside," Pabari said.
The currency is likely to trade within a range of 84.35 to 84.50 throughout the day, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.
As of now, while the rupee remains vulnerable to global market dynamics, domestic efforts to curb volatility are expected to provide some support in the near term.
