Indian rupee gains 33 paise to close at 94.93 against US dollar

Mumbai: The rupee appreciated 33 paise to close at 94.93 (provisional) against the US dollar on Friday, supported by a positive trend in domestic markets and a weaker US dollar, though elevated crude oil prices and weakness in broader markets capped sharper gains.

Forex traders said both the currency and bond markets found additional support from softer crude oil prices and intervention by the central bank.

At the interbank foreign exchange market, the rupee opened at 95.21, gained ground and touched an intraday high of 94.94 and a low of 95.28 against the US dollar before finally closing at 94.93 (provisional), registering a gain of 33 paise over its previous close.

On Thursday, the rupee consolidated in a narrow range and ended 2 paise higher at 95.26 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 101.66, down 0.37 per cent.

Brent crude, the global oil benchmark, was trading 1.03 per cent lower at USD 114.13 per barrel in futures trade.

On the domestic equity market front, the Sensex climbed 308.49 points to settle at 74,459.53, while the Nifty rose 116.35 points to 23,053.10.

“We expect the rupee to trade with a slight negative bias amid geopolitical tensions in the Middle East after the US warned its allies to prepare for a fresh strike on Iran after the US elections,” said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan.

Choudhary further noted that a surge in crude oil prices could also put pressure on the rupee. “However, positive domestic markets, a soft US dollar and US Treasury yields may support the rupee at lower levels. Any intervention by the RBI may also support the rupee at lower levels. The USD-INR spot price is expected to trade in a range of 94.80 to 95.35,” he said.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 943.60 crore on a net basis on Thursday, according to exchange data.

Meanwhile, the IMF on Thursday said exchange rate flexibility should be the preferred policy response to help the Indian economy adjust to energy shocks, amid reports that the RBI had resorted to massive market intervention to support the rupee.

“Our view is that the rupee should be the first line of defence in the face of these shocks. So, allowing the exchange rate to move freely to reflect the impact of these shocks is important to help the Indian economy adjust to the shocks,” IMF Communications Director Julie Kozack said.