Rupee Gains 24 Paise to 95.72 as Brent Crude Falls 2.1%
The Indian rupee strengthened to 95.72 against the dollar, supported by a 2.1% drop in Brent crude and strong equity performance.
Key points
- The rupee gained 24 paise to 95.72 against the dollar, reversing a previous 7-paise loss.
- Brent crude fell 2.10% to $101.69, reducing pressure on India's import bill and current account.
- The Sensex rose 448 points to 74,743, with foreign investors buying Rs 599.54 crore in equities.
The rupee strengthened by 24 paise to 95.72 against the US dollar in early Monday trade. This gain followed a previous close of 95.96, marking a reversal from Friday's 7-paise decline. Traders cited falling crude oil prices and positive equity market sentiment as the primary drivers of this movement.
Brent crude futures dropped 2.10% to $101.69 per barrel, reducing pressure on India's import bill. The dollar index remained firm at 100.31, yet the rupee found support from domestic market gains. The Times of India reported that these factors combined to stabilize the currency.
Equity gains support currency value
The Sensex index jumped 448.32 points to reach 74,743.28 in early trading sessions. The Nifty 50 index followed suit, rising 50.3 points to 23,396.70. These gains reflect improved investor confidence in the domestic market.
Foreign Institutional Investors bought a net worth of Rs 599.54 crore on Friday. This inflow of capital helped bolster the rupee's position against the dollar. Positive fund flows remain a key indicator for currency stability in the coming days.
RBI intervention defines price range
The Reserve Bank of India has actively intervened near the 96-per-dollar level recently. Anindya Banerjee of Kotak Securities expects the rupee to trade within a 95.60 to 96.50 range. The 96.40 to 96.50 zone is identified as strong resistance for the currency.
India's forex reserves decreased by USD 4.924 billion to USD 780.782 billion. This drop occurred during the week ended September 11 due to lower foreign currency and gold holdings. Traders are monitoring these reserves closely for signs of further intervention.
Oil prices impact import costs
Higher oil prices significantly widen India's import bill and pressure the current account. The recent 2.10% drop in Brent crude provided immediate relief to the rupee. Sustained importer demand for dollars remains a counterweight to this positive trend.
The dollar index rose 0.09% to 100.31, indicating broader greenback strength. Despite this, the rupee's early gains highlight the dominance of domestic factors. The interplay between global oil prices and local equity flows dictates the currency's direction.
