Rupee Strengthens for Third Consecutive Session, Closes at 86.55 Against Dollar

The Indian rupee continued its upward trend on Tuesday, gaining 26 paise to conclude at 86.55 (provisional) against the US dollar. This marks the third consecutive session of appreciation for the rupee, driven by solid performances in domestic equity markets and a declining US dollar, particularly following disappointing economic reports from the United States.

During trading on the interbank foreign exchange market, the rupee experienced significant volatility. It opened at 86.71, reached an intraday high of 86.54, and dipped to a low of 86.78 against the greenback. Forex traders indicated that the rupee's robust performance was influenced by a weaker US dollar index and stronger Asian currencies, although rising crude oil prices limited some gains.

Earlier in the week, on Monday, the rupee rose by 24 paise to settle at 86.81 against the US dollar. Furthermore, on Thursday, it had increased by 17 paise, finishing the day at 87.05.

Commenting on the situation, Jateen Trivedi, a Vice President and Research Analyst at LKP Securities, stated, "The rupee traded higher by 0.25 rupees, reaching 86.60, as strong inflows into the capital markets from domestic institutional investors (DII) outstripped the selling pressure from foreign institutional investors (FII). With the Nifty index rising by 325 points or 1.45 percent, and notable gains in the banking sector at 1.99 percent, the rupee found solid support."

Trivedi added that the declining dollar index provided further stability to the Indian currency. He suggested that unless influenced by external events like new US economic data or changes in Federal Reserve policies, the rupee's strengthening trend is likely to continue. He noted that the rupee's trading range has now adjusted higher to between 86.25 and 86.90, reflecting ongoing capital inflows.

Dilip Parmar, a Research Analyst at HDFC Securities, pointed out that the Indian rupee is currently experiencing its largest five-day percentage increase since March 2023. He cited strong economic performance, positive market sentiment, and the anticipation of foreign capital inflows as key contributors to the rupee's rise. He mentioned that in the short term, the USDINR spot rate has immediate support at 86.42 and resistance at 86.90, with the technical outlook increasingly favoring the rupee's bulls.

Dollar Index Declines to 103.32

In the meanwhile, the dollar index, which gauges the US dollar's strength against a collection of six major currencies, fell 0.04 percent to 103.32. On the other hand, Brent crude, the international oil benchmark, saw a rise of 1.31 percent, reaching 72 dollars per barrel in futures trading, which slightly constrained some of the rupee's gains.

Stock Market Overview: Sensex Rallies by 1,131 Points, Nifty Closes at 22,834

On the domestic front, the Indian stock markets are witnessing a significant rally. The Sensex rose by an impressive 1,131 points to finish at 75,301, while the Nifty closed at 22,834. This surge was fueled by strong buying across all sectors, enhancing investor sentiment and ensuring all sectoral indices finished in positive territory.

Rupee, Dollar, Market