On Wednesday, the Indian rupee marked its fourth consecutive day of gains, appreciating by 12 paise to settle at 86.44 against the US dollar. This positive movement was bolstered by a robust performance in domestic equity markets and a decline in global crude oil prices. However, the rise was somewhat tempered by the strengthening of the US dollar ahead of the Federal Reserve’s anticipated interest rate decision, according to foreign exchange traders.

Rupee Performance and Market Trends

The rupee began trading at 86.60 on the interbank foreign exchange and experienced an intraday low of 86.68 against the greenback. It peaked at 86.43 before concluding the day at 86.44, showing a notable increase from its previous close. The local currency had settled at 86.56 on Tuesday, reflecting an overall upward trend.

• Intraday Performance:
  • Opened at: 86.60
  • Lowest point: 86.68
  • Highest point: 86.43
  • Final closing: 86.44, up 12 paise

Factors Influencing the Rupee’s Appreciation

Anuj Choudhary, a Research Analyst at Mirae Asset Sharekhan, noted that the rupee’s strength can be attributed to several factors:

• Strong Domestic Equities: The positive sentiment in local markets instigated confidence among investors.
• Declining Crude Oil Prices: A drop in global oil prices has eased inflationary pressures, positively impacting the rupee.
• Foreign Institutional Investor (FII) Inflows: Increased investments from FIIs have provided additional support to the currency.

Choudhary anticipates that the rupee will continue to trade favorably, buoyed by ongoing positive trends in domestic markets and fresh FII investments. He mentioned, “The sustained decrease in crude oil prices and the weakening of the greenback could further support the rupee. However, investors are likely to remain cautious ahead of the FOMC meeting, where the Fed is expected to maintain current interest rates.”

Global Market Overview

As the US dollar index rose by 0.36% to 103.26, reflecting its strength against a basket of major currencies, Brent crude oil futures also saw a decline, trading 0.77% lower at $70.02 per barrel.

In the domestic equity scene, the BSE Sensex increased by 147.79 points (0.20%) to close at 75,449.05, while the Nifty index climbed 73.30 points (0.32%) to finish at 22,907.60. Notably, foreign institutional investors were net buyers, acquiring equities worth ₹694.57 crore on Tuesday.

Looking Ahead

In summary, the rupee’s outlook remains optimistic as it rides the wave of favorable domestic conditions and declining oil prices. With the USD-INR spot price projected to fluctuate between ₹86.20 to ₹86.80, market participants are keenly watching for developments from the upcoming FOMC meeting.