Rupee rises by 13 paise against US dollar on forex inflows, stocks rally

Mumbai, March 31 (PTI) The rupee appreciated 13 paise to 82.21 against the US dollar on Friday as foreign capital inflows and a rally in domestic stocks bolstered investor sentiment.

Besides, easing global crude oil prices and a rising appetite for riskier assets also supported the domestic unit, forex traders said.

However, a strong dollar against major rivals overseas ahead of US inflation data capped the rupee’s gain, they added.

At the interbank foreign exchange market, the domestic unit opened strong at 82.12 and touched an intra-day high of 82.09 and a low of 82.26 against the greenback.

The local unit finally closed at 82.21, registering a gain of 13 paise over its previous close of 82.34.

The forex market was closed on Thursday for Ram Navami.

“The Indian rupee marked the second weekly and best quarterly gains in the last nine quarters following lower trade deficits and lower crude oil prices. The foreign fund inflows and stronger regional currencies also supported the rupee’s recovery.

“Ahead of next week’s RBI monetary policy decision, the rupee is expected to trade between 81.70 to 82.50. Market participants are already pricing in a quarter basis points increase in the interest rate and expecting a pause for the later part of the year,” said Dilip Parmar, Research Analyst, HDFC Securities.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, gained 0.25 per cent to 102.08 ahead of the release of the US inflation data later in the day.

“Rupee continued to trade in a narrow range and in today’s Asian session gains could extend as the dollar further fell against its major crosses. Market participants remained cautious ahead of the important final GDP number that was released from the US,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

On the domestic equity market front, the 30-share BSE Sensex rose 1,031.43 points or 1.78 per cent to end at 58,991.52 while the broader NSE Nifty advanced 279.05 points or 1.63 per cent to 17,359.75.

Global oil benchmark Brent crude futures fell 0.24 per cent to USD 79.08 per barrel.

Foreign Institutional Investors (FIIs) were net buyers in the capital market on Friday as they bought shares worth Rs 357.86 crore, as per exchange data.

“USD/INR has witnessed some high drama and volatility during FY23 due to global geopolitics and Fed rate hikes. We expect FY24 to be less volatile as central banks slowly end their rate-hiking campaigns and move towards lowering rates.

“We move from a year of policy divergence to policy convergence. Therefore, this could be a year of two halves. The first half can see some volatility as the Fed is yet to announce a peak of its rate hikes,” said Anindya Banerjee, VP – Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd.

Therefore, there is a possibility of 81.00-83.50 range over this period. But, during the second half, the Fed and other central banks are expected to lower rates, which can be positive for the rupee. Therefore, we could see USD INR in a range of 80.00-83.00, Banerjee added.