Rupee Update: INR Appreciates 4 Paise to 83.47 Against USD

This article provides an overview of the current status of the Indian rupee (INR) against the US dollar (USD) in early trade, along with factors influencing the currency’s movement and its potential impact on various economic indicators. Here’s a detailed breakdown:

1. Rupee Appreciation: The INR strengthened by 4 paise against the USD, trading at 83.47 in early trade. This movement is attributed to a positive trend in domestic equities.

2. Factors Influencing Rupee Movement:

   • Foreign Exchange Activities: Foreign investors buying USD and the Reserve Bank of India (RBI) selling USD are affecting the USD/INR pair, expected to keep it range-bound.

   • Foreign Fund Outflows: Sustained foreign fund outflows are putting pressure on the INR, limiting its upward movement.

3. Interbank Foreign Exchange Market: The INR traded within a narrow range, opening at 83.49 against the USD and touching 83.47 in initial trade, representing a 4-paise rise from the previous close.

4. Dollar Index: The dollar index, measuring the USD’s strength against a basket of six currencies, stood at 104.93, showing a slight decrease.

5. Crude Oil Prices: Brent crude futures rose to USD 82.95 per barrel, albeit lower than the recent peak of USD 84 per barrel. The decrease in oil prices is anticipated to positively impact India’s trade balance and ease pressure on the trade deficit.

6. Economic Outlook:

   • CR Forex Advisors MD, Amit Pabari, suggests that lower oil prices could alleviate pressure on the trade deficit, offering a favorable economic outlook. This could potentially lead to INR appreciation.

   • The article notes that a stronger INR could result from reduced pressure on the domestic currency due to favorable trade balance conditions.

7. Equity Market Performance:

   • The BSE Sensex was trading higher by 115.03 points (0.16%) at 73,219.64 points, while the NSE Nifty rose by 53.00 points (0.24%) to 22,270.85 points.

   • Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday, offloading shares worth Rs 4,065.52 crore.

8. Macroeconomic Indicators:

   • Wholesale inflation increased to a 13-month high of 1.26% in April, driven by rising prices of food articles, especially vegetables. Expectations suggest the RBI may hold interest rates in the upcoming policy review.

This detailed analysis offers insights into the various factors shaping the movement of the INR against the USD and its broader implications on the Indian economy.

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