The Indian rupee experienced a positive turn on Wednesday, gaining 3 paise to settle at 85.69 against the US dollar. This rebound came as a result of renewed foreign fund inflows, which helped offset initial losses. However, forex experts note that the currency still faces challenges due to liquidity issues, concerns about reciprocal tariffs, and increased month-end demand for dollars from importers.
Rupee’s Performance in Forex Markets
At the interbank forex market, the rupee opened at 85.71, reaching an intraday high of 85.68 and dipping to a low of 85.98 against the greenback. By the end of the trading session, it recorded a modest gain, recovering from a decline the previous day when it fell 11 paise to 85.72.
- Opening Rate: 85.71
- Intraday High: 85.68
- Intraday Low: 85.98
- Closing Rate: 85.69
Dilip Parmar, a Senior Research Analyst at HDFC Securities, stated, “The rupee’s strength today can be attributed to a resurgence in foreign fund inflows and increased dollar supply from foreign banks and exporters.” However, he emphasized that trading activity remains low as market players adjust their positions ahead of the fiscal year-end.
Future Outlook for the Rupee
Looking ahead, Parmar predicts that the USD-INR exchange rate may find support around 85.40 but could face resistance near the 86.25 mark. Geopolitical tensions, particularly the situation in Gaza and US military actions in the region, have heightened demand for safe-haven currencies like the US dollar.
- Support Level: 85.40
- Resistance Level: 86.25
Impact of Global Events on Currency Markets
Recent threats from US President Donald Trump regarding a potential 25% tariff on oil imports from Venezuela have also put upward pressure on global oil prices. This geopolitical landscape has resulted in fluctuations in the Brent crude benchmarks, which rose by 0.63% to $73.48 per barrel in futures trading.
In the stock markets, the BSE Sensex dropped by 728.69 points, or 0.93%, ending at 77,288.50, while the Nifty fell 181.80 points, or 0.77%, closing at 23,486.85. Despite the downturn in equities, foreign institutional investors (FIIs) showed strong interest, purchasing equities worth approximately ₹5,371.57 crore on a net basis.
Key Takeaways
- The rupee closes higher at 85.69 against the US dollar.
- Foreign fund inflows play a crucial role in stabilizing the currency.
- Geopolitical tensions are driving demand for safe-haven assets.
- The domestic equity market sees a significant drop amid profit-taking.
As the financial landscape evolves, market participants will be keenly observing these trends and adjusting their strategies accordingly. For more insights on forex trading and market analysis, stay tuned to our updates.
