The Indian rupee strengthened by 27 paise to settle at 94.22 against the US dollar on Thursday, recovering from a weak opening amid volatile trading conditions in the interbank foreign exchange market.
Market Performance
At the interbank foreign exchange market, the rupee witnessed high volatility. It opened at 94.77 against the US dollar, registering a fall of 28 paise over its previous close. However, the domestic unit staged a strong recovery during the day's trade, eventually closing at 94.22, a gain of 27 paise from the previous session's closing level.
Trading Range
The rupee moved in a wide range during the trading session, touching an intraday low of 94.77 and a high of 94.15. The currency's movement was influenced by a mix of domestic and global factors, including fluctuations in crude oil prices and foreign fund flows.
Forex traders noted that the dollar index, which measures the greenback's strength against a basket of six major currencies, also played a role in determining the rupee's trajectory. A weaker dollar in global markets provided support to the rupee, allowing it to pare its initial losses and close on a positive note.
Impact of Crude Oil Prices
Crude oil prices remained a key factor for the rupee's movement. Brent crude, the global benchmark, traded around $75 per barrel, with any upward movement potentially adding pressure on the Indian currency due to the country's dependence on oil imports.
Foreign Fund Flows
Foreign institutional investors (FIIs) were net sellers in the capital markets on Wednesday, offloading shares worth Rs 1,200 crore, as per exchange data. However, domestic institutional investors provided some support by buying equities.
The domestic equity market ended on a mixed note, with the BSE Sensex closing 150 points higher, while the NSE Nifty gained 45 points. Positive cues from Asian markets also aided investor sentiment.
Outlook
Analysts expect the rupee to remain range-bound in the near term, with the 94.00-95.00 band acting as a key support and resistance level. The upcoming monetary policy decision by the Reserve Bank of India (RBI) and global economic data releases will be closely watched for further direction.
The rupee's recovery reflects resilience amid global uncertainties, and market participants will continue to monitor geopolitical developments and central bank actions for cues.
