Indian rupee stages strong comeback despite crude oil, dollar pressure
New Delhi, November 6: The Indian rupee made a strong comeback in the foreign exchange market today, driven by strong buying by foreign institutional investors (FIIs) in the domestic stock market. Despite pressure from rising crude oil prices and a strong US dollar in the global market, the Indian currency recovered against the US dollar today, reaching its highest level in nearly six months.
However, today’s trading session started on a sluggish note for the Indian currency. The rupee opened with a decline compared to Thursday’s closing level. Shortly after, a massive cash inflow from foreign investors stabilized the rupee’s position in the market. Due to the continued inflow of foreign currency into the currency market, the rupee made a spectacular U-turn from its lows. This is considered to be the rupee’s strongest intra-day level since May 7.
The Indian rupee opened weak at 94.50 against the US dollar in the foreign exchange market this morning, compared to its previous close of 94.41 on Thursday. Initially, it registered a 9 paise weakness. Subsequently, the situation changed dramatically due to increased inflows of foreign funds. Within a short time, the rupee quickly recovered its losses and strengthened. The
Indian currency initially improved to 94.36. After holding at this level for some time, it reached a six-month high of 93.87 intraday. At 2 pm, the Indian rupee was trading around 93.88 against the US dollar, registering a gain of approximately 53 paise, or 0.56 percent, from its previous close.
Along with the dollar, the Indian rupee also made strong gains against other major international currencies. The Indian Rupee is showing a strong bullish trend today against the British Pound (GBP). The Pound, which closed at 127.18 in the previous trading session, has come down to 126.34 today with a huge decline of Rs 0.84 i.e. 0.66 percent due to the strengthening of the Rupee, which has given a big relief to the importers from Britain.
Similarly, the Rupee is showing full strength today against the European Union’s common currency Euro. The Euro, which closed at Rs 106.10 in the previous session, is seen trading at Rs 105.34 today, having suffered a weakness of Rs 0.75 i.e. 0.71 percent against the Indian currency.
Market experts say that the rupee’s opening was influenced by the rise in international crude oil prices and the dollar’s recovery in this morning’s session. Brent crude futures rose by more than 2 percent globally, crossing the $100 per barrel mark once again. Since India imports most of its oil needs from the international market, a rise in crude oil prices increases dollar demand, which is considered detrimental to the rupee’s health. Furthermore, the dollar index, which measures the dollar’s strength against six major global currencies, also rose 0.35 percent to 101.90, exerting some pressure on the rupee in early trading.
Despite these adverse conditions, investments by foreign institutional investors in the Indian stock market proved to be a major lifeline for the rupee. According to official data, foreign investors acted as net buyers in the Indian stock market on the previous trading day, making bumper purchases of shares worth approximately Rs 14,974.68 crore, which increased dollar liquidity in the foreign exchange market.
Market experts believe that the strength of the Indian stock market and the continued investment by foreign investors may keep the rupee strong in the coming times as well. However, the ongoing tension between Russia and Ukraine, as well as fluctuations in crude oil prices due to the situation in the Middle East, may further halt the rupee’s rise.
