The Indian rupee appreciated by 76 paise to settle at 95.60 against the US dollar on Friday, marking its strongest close in over a week. The rally was fueled by a decline in the American currency overseas and a robust performance in domestic equity markets.
Key Drivers Behind the Rupee's Surge
Forex traders attributed the rupee's gains to sustained foreign fund inflows and a softening in global crude oil prices. The dollar index, which gauges the greenback's strength against six major currencies, slipped 0.2% to 104.50, providing support to emerging market currencies.
Positive sentiment in Indian equities also aided the rupee. The BSE Sensex climbed 450 points to end at 62,000, while the Nifty 50 advanced 135 points to 18,450. This optimism was bolstered by expectations of continued economic growth and stable policy measures.
Impact of Global Factors
Weaker-than-expected US economic data raised hopes that the Federal Reserve might slow the pace of interest rate hikes, weighing on the dollar. Additionally, a dip in Brent crude oil prices to $82 per barrel eased India's import bill, further supporting the rupee.
Forex Market Outlook
Analysts believe the rupee could maintain its upward trajectory if foreign portfolio investments continue to flow into Indian markets. However, geopolitical tensions and any sudden spike in oil prices remain key risks. The Reserve Bank of India's intervention in the forex market also played a role in curbing volatility.
On the interbank foreign exchange market, the rupee opened strong at 96.10 and touched an intraday high of 95.55 before closing at 95.60. The previous close was 96.36.
