The Indian Rupee appreciated by 19 paise to reach 95.16 against the US Dollar in early trade on Friday, recovering from the previous session’s losses. The minor rally was primarily supported by a retreating US Dollar Index and a softening global crude oil benchmark.
Intra-Day Forex Movement
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Opening Note: The rupee opened at 95.20 at the interbank foreign exchange market before ticking upward to its early high of 95.16.
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The Previous Session: On Thursday, the local currency had wiped out its morning gains to close 19 paise lower at 95.35.
Key Macro Market Indicators
Triggers Limiting the Rupee’s Upside
Despite favorable global cues like cooling oil prices and a weaker dollar index, experts note that the rupee remains structurally capped due to domestic demand and central bank intervention:
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Persistent Importer Demand: Corporate hedgers and oil importers continue to aggressively buy dollars on any dips, limiting major gains for the local currency.
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RBI Reserve Rebuilding: India’s foreign exchange reserves have dropped from a peak of $728.49 billion in February down to approximately $672.6 billion.
“The Reserve Bank of India is focused on restoring its forex reserves… Hence, the central bank has less room to allow the rupee to appreciate freely, even when global conditions are supportive. If the rupee cannot strengthen on positive global cues, any negative development could easily push USDINR towards the 95.80 to 96.00 zone.” — Amit Pabari, MD, CR Forex Advisors
Domestic Equity Boost
The domestic stock markets mirrored the optimistic global setup in early trade. The BSE Sensex jumped 545.89 points to trade at 78,048.01, while the NSE Nifty 50 surged 173.85 points to 24,346.90. This comes despite net institutional selling on Thursday, where Foreign Institutional Investors (FIIs) offloaded equities worth ₹311.82 crore.
