The Indian rupee made a notable gain in early trading on Monday, appreciating by 12 paise to settle at 85.86 against the US dollar. This upward movement was largely supported by robust domestic inflows. However, market analysts caution that persistent challenges, including fluctuations in crude oil prices and liquidity issues, continue to loom over the currency’s stability.
Rupee’s Performance in Forex Market
On the interbank foreign exchange platform, the rupee opened at 85.93 against the dollar but quickly gained momentum, reaching 85.86—an increase of 12 paise from its previous closing value. For context, just last Friday, the rupee rose by 38 paise, closing at 85.98.
- Key Insights:
- The rupee remains susceptible to external pressures, particularly from oil price changes.
- Brent crude oil prices have surged toward $72 per barrel amid rising geopolitical tensions in the Middle East, according to Amit Pabari, Managing Director of CR Forex Advisors.
Foreign Investment Boost
In a positive turn for the market, foreign institutional investors (FIIs) net purchased equities worth ₹7,470.36 crore on Friday, as reported by exchange data. This surge in investment was primarily driven by the FTSE March review and significant fundraising activities:
- Recent Fundraising Highlights:
- State-run enterprises successfully raised ₹14,000 crore.
- Indian states mobilized ₹40,100 crore through debt sales.
- Non-Banking Financial Companies (NBFCs) issued bonds totaling ₹16,400 crore, enhancing liquidity and investor confidence.
Current Market Indicators
As of now, the US dollar index, which measures the dollar’s strength against six major currencies, was up 0.06%, trading at 104.15. Meanwhile, Brent crude futures were down 0.37%, trading at $71.89 per barrel.
In the domestic equity market, the BSE Sensex was trading 563.05 points (or 0.73%) higher at 77,468.56 points, while the Nifty index increased by 153.20 points (or 0.66%) to reach 23,503.60 points.
Forex Reserves on the Rise
According to the Reserve Bank of India (RBI), the country’s foreign exchange reserves rose by $305 million, reaching $654.271 billion during the week ending March 14. This increase follows a substantial rise of $15.267 billion in the previous week, marking the most significant weekly gain in two years. The growth in reserves is partly attributed to a $10 billion forex swap facilitated by the RBI.
This upward trend in the rupee and the overall economic indicators illustrate a complex but optimistic picture for India’s financial landscape, reflecting both resilience and vulnerability amid global economic shifts.
