The Indian rupee appreciated by 5 paise to settle at 95.18 against the US dollar on Thursday, marking a modest gain driven by positive cues from domestic equity markets and sustained foreign capital inflows.
Market Dynamics
At the interbank foreign exchange market, the rupee opened at 95.20 and fluctuated within a narrow range before closing at 95.18, reflecting a 5-paise improvement from the previous close of 95.23. The local unit witnessed a low of 95.25 during the session.
Supporting Factors
- Domestic Equities: A rally in Indian stock markets, with the BSE Sensex gaining over 200 points, boosted investor sentiment and supported the rupee.
- Foreign Fund Inflows: Continued buying by foreign portfolio investors in domestic equities provided additional support to the currency.
Global Cues
Meanwhile, the US dollar index, which measures the greenback's strength against a basket of six major currencies, was trading 0.1% lower at 104.20, indicating a slight weakening of the dollar globally. This also contributed to the rupee's appreciation.
Outlook
Analysts expect the rupee to remain range-bound in the near term, with movements influenced by global risk appetite, crude oil prices, and the Reserve Bank of India's monetary policy stance. The rupee has been under pressure in recent weeks due to geopolitical tensions and rising crude oil prices, but Thursday's close was a positive sign for the currency.
