The Indian rupee recovered from its early losses and settled 10 paise higher at 94.50 against the US dollar on Wednesday, tracking a positive trend in domestic equities and sustained foreign capital inflows.
Rupee Movement in Recent Sessions
In the past four trading sessions, the USD/INR pair has gained over 140 paise against the greenback. The local unit opened at 94.60 at the interbank foreign exchange market and moved in a range of 94.48 to 94.65 during the day. It finally settled at 94.50, registering a gain of 10 paise over its previous close of 94.60.
Factors Supporting the Rupee
Forex traders said the rupee appreciated amid a weak US dollar in the global market and sustained foreign fund inflows into domestic equities. However, a surge in crude oil prices and concerns over the widening trade deficit capped the gains. The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.12% lower at 96.89.
Domestic Equity Market
On the domestic equity market front, the 30-share BSE Sensex ended 245.32 points or 0.42% higher at 58,653.28, while the broader NSE Nifty rose 72.10 points or 0.41% to 17,468.70. Foreign institutional investors (FIIs) were net buyers in the capital market on Tuesday, as they purchased shares worth Rs 1,245.66 crore, according to exchange data.
Brent Crude and Trade Deficit
Brent crude futures, the global oil benchmark, rose 0.37% to $74.58 per barrel. The rise in oil prices poses a risk to the rupee as India imports most of its crude oil requirements. Meanwhile, the country's trade deficit widened to $23.28 billion in May, which also weighed on the currency.
