The rupee appreciated 20 paise to 94.25 against the US dollar in early trade on Monday supported by easing crude oil prices, even as a firm US dollar and tepid investor risk appetite weighed on sentiments.
Forex traders said the rupee opened on a positive note with oil prices remaining supportive and foreign inflows improving. The overall bias remains positive for the rupee, they said, adding that the immediate hurdle remains the US dollar, which continues to hold firm near a 13-month high.
At the interbank foreign exchange market the rupee opened at 94.36, then gained momentum and touched 94.25, registering a gain of 20 paise from its previous low.
On Thursday, the rupee settled at 94.45 against the US dollar.
Indian stock, currency, and commodities markets were shut on Friday on account of Muharram.
“The rupee may remain under pressure amid a firm US dollar and the risk of a rebound in crude oil prices, though bond inflows could offer some support. Technically, 93.50–94.10 is a strong support zone, while a breakout above 94.80 could open the way towards 95.30–95.50,” said CR Forex Advisors MD – Amit Pabari.
Meanwhile, India’s forex reserves increased by $963 million to $672.587 billion during the week ended June 19, the RBI said on Friday. In the previous reporting week, the overall reserves had dropped by $9.985 billion to $671.625 billion.
According to Pabari, a steady gain in India’s forex reserves shows the Reserve Bank is rebuilding its buffer after months of heavy dollar selling.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 101.37, up 0.02 per cent.
Brent crude, the global oil benchmark, was trading higher by 0.72 per cent at $72.51 per barrel in futures trade.
“Brent crude has slipped to around $72 per barrel, its lowest in four months, after falling more than 10 per cent in just one week. Tankers are moving freely through the Strait of Hormuz again, and Gulf supply is returning to normal. For a country that imports most of its crude, this means a lighter import bill and softer dollar demand,” Pabari said.
On the domestic equity market front, Sensex declined 63.65 points to 77,047.63 in early trade, Nifty was marginally up by 16.55 points to 24,070.20.
Foreign institutional investors purchased equities worth $383.76 crore on a net basis on Thursday, according to exchange data.