Rupee Appreciates 7 Paise to 83.24 Against US Dollar in Early Trade
The Indian rupee appreciated by 7 paise to 83.24 against the US dollar on Wednesday, benefiting from softening crude oil prices in the international market. This follows a 6 paise appreciation on Tuesday, where the rupee closed at 83.31 against the US dollar.
Key Points:
- Opening and Trading Levels:
- The rupee opened at 83.29 at the interbank foreign exchange market and moved up to trade at 83.24 against the greenback, marking a gain of 7 paise from the previous close.
- Factors Influencing the Rupee:
- Crude Oil Prices: The appreciation was supported by declining crude oil prices.
- Equity Market Sentiment: The rupee faced resistance due to subdued sentiment in the domestic equity market.
- Foreign Fund Outflows: Continued foreign fund outflows also exerted pressure on the local unit.
- Forex Market Insights:
- Amit Pabari, MD of CR Forex Advisors, mentioned that the rupee aligning with its fundamentals could lead to short-term levels of 83.00 to 83.10, with a medium-term target range of 82.80 to 82.50.
- Global Indicators:
- The dollar index, which measures the US dollar’s strength against a basket of six currencies, was slightly lower by 0.02%, trading at 104.63.
- Brent crude futures, the global oil benchmark, declined by 0.65% to $82.34 per barrel.
- Domestic Equity Market Performance:
- The 30-share BSE Sensex was down 37.12 points, or 0.05%, at 73,916.19 points.
- The broader NSE Nifty decreased by 30.40 points, or 0.13%, to 22,498.65 points.
- Foreign Institutional Investors (FIIs):
- FIIs were net sellers in the capital markets on Tuesday, offloading shares worth Rs 1,874.54 crore, as per exchange data.
- Macroeconomic Outlook:
- The Reserve Bank of India’s May Bulletin projected that India would grow by 7.5% in the first quarter of the current financial year. This growth is expected to be driven by rising aggregate demand and non-food spending in the rural economy.
Summary
The rupee’s appreciation to 83.24 against the US dollar in early trade on Wednesday reflects a combination of favorable global crude oil prices, forex market dynamics, and specific domestic factors. Despite resistance from a subdued equity market and foreign fund outflows, the rupee’s alignment with its fundamentals suggests potential stability and appreciation in the short to medium term. Additionally, positive macroeconomic indicators, such as projected growth driven by aggregate demand, reinforce a favorable outlook for the Indian economy.
