The rupee strengthens against the dollar, supported by a positive equities trend
| Photo Credit: The Hindu

The Rupee appreciated 8 paise to 83.89 against the U.S. dollar in early trade on Friday (August 9, 2024), supported by a positive trend in domestic equities and a decline in the U.S. dollar index.

Forex traders said that after the Reserve Bank of India’s monetary policy announcement, markets now await U.S. CPI data, India CPI, WPI and IIP data and India’s trade data, all scheduled to be released next week.

“The Jackson Holes Symposium to be held after next week will also remain in focus,” traders said.

At the interbank foreign exchange, the rupee opened at 83.95 against the greenback, then touched 83.89, registering a rise of 8 paise over its previous closing price.

On Thursday (August 8, 2024), the rupee consolidated in a narrow range and settled for the day lower by 2 paise at 83.97 against the U.S. dollar.

“The rupee was protected by the Reserve Bank of India (RBI) at 83.96 for this week and the local unit is likely to trade in a narrow range of 83.90/84.00 for the day after the RBI kept key benchmark rates on hold,” said Anil Kumar Bhansali, Head of Treasury and Executive Director of Finrex Treasury Advisors LLP.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.03% lower at 103.17.

Brent crude, the global oil benchmark, advanced 0.15% to $79.28 per barrel. “Brent oil prices rose to $79.22, a 3% weekly gain, on rising Middle East tensions and better than expected U.S. jobless claims data, giving a better outlook on the U.S. economy,” Mr. Bhansali added.

Market analysts said while the rupee seems to be tilting towards a negative bias, sharp fluctuations are not anticipated.

Meanwhile, the Monetary Policy Committee (MPC) of the Reserve Bank kept the benchmark repurchase or repo rate unchanged at 6.50%. Announcing the bi-monthly monetary policy review RBI Governor Shaktikanta Das said, “The Indian rupee has remained largely range-bound so far this financial year.”

Mr. Das further noted that the country’s forex reserves touched a record high of $675 billion as of August 2.

On the domestic equity market front, Sensex surged 958.63 points, or 1.22%, to 79,844.85 points. The Nifty advanced 280.70 points, or 1.16%, to 24,397.70 points.

“Foreign institutional investors (FIIs) were net sellers in the capital markets on Thursday (August 8, 2024), as they offloaded shares worth ₹2,626.73 crore,” according to exchange data.

On August 1, the Rupee declined five paise to settle at 83.73 against the U.S. dollar.
| Photo Credit: The Hindu

The Rupee turned flat at 83.73 against the U.S. currency on August 2 amid weak equity markets and an upward movement in crude oil prices overseas.

According to forex traders, “the Indian currency found support due to softening the dollar against major rivals following the U.S. Federal Reserve’s decision to maintain the status quo on interest rates and some inflows of foreign capital into Indian equities.”

At the interbank currency exchange, the domestic currency opened at 83.74 and inched up to trade at 83.73 against the dollar, the previous day’s closing level. On August 1, the Rupee declined five paise to settle at 83.73 against the U.S. dollar.

Anand James, Chief Market Strategist of Geojit Financial Services, said the Rupee’s weakness was capped by “a likely intervention from the Reserve Bank of India”.

“The next key U.S. economic release is the July jobs report, expected on August 2,” he added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.07% to 104.13. Brent crude — the global oil benchmark — rose by 0.79% to $80.15 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex plunged 614.96 points or 0.75% to 81,252.59 in morning trade, while the broader Nifty declined 194.80 points or 0.78% to 24,816.10.

“Foreign institutional investors were net buyers in the capital markets on August 1 and bought shares worth ₹2,089.28 crore, “ according to exchange data.

A monthly survey released on August 1 showed India’s manufacturing sector growth eased slightly to 58.1 in July from 58.3 in June on softer increases in new orders and output, while cost pressures and demand strength led to the steepest increase in selling prices since October 2013.

“The government’s GST collections in July rose 10.3% to more than ₹1.82 lakh crore, driven by domestic transactions in goods and services,” according to official data released on August 1.