In early trade on Friday, the rupee exhibited limited movement against the US dollar, as the positive performance of domestic equities was countered by elevated crude oil prices.
According to forex traders, the strength of the American currency in the international market and substantial foreign fund outflows adversely affected investor sentiment.
At the interbank foreign exchange market, the domestic unit commenced trading at 83.48, reaching 83.46 in the initial session, indicating a marginal gain of 2 paise from its previous close. On the preceding day, the rupee concluded at 83.48 vis-à-vis the American currency.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, remarked, “The Indian Rupee experienced further depreciation on Thursday due to continued FPI outflows, driving demand for the US dollar. Moreover, potential RBI interventions at 83.50 prevented significant upward movement in the USD/INR pair. A similar trend is anticipated on Friday, with the RBI maintaining its stance at 83.50.”
In parallel, the dollar index, which assesses the greenback’s performance against a basket of six currencies, stood at 105.30, indicating a modest increase of 0.07 percent.
Meanwhile, Brent crude futures, the global benchmark for oil, climbed by 0.55 percent to reach USD 84.34 per barrel.
In the domestic stock market scenario, the 30-share BSE Sensex witnessed a rise of 169.82 points, or 0.23 percent, reaching 72,573.99 points. Simultaneously, the broader NSE Nifty advanced by 67.05 points, or 0.31 percent, to 22,024.55 points.
Foreign Institutional Investors (FIIs) displayed a net selling stance in the capital markets on Thursday, offloading shares worth Rs 6,994.86 crore, as per exchange data.
Bhansali further noted, “FPIs have divested Rs 22,858 crore over six trading sessions in May 2024, while Domestic Institutional Investors (DIIs) have remained net buyers, purchasing stocks valued at Rs 16,700 crore. The market sentiment has been influenced by uncertainties surrounding election outcomes and heightened US treasury yields, contributing to this sell-off.”
