Rupee Gains 24 Paise to 95.72 on Equity Strength

The Indian rupee appreciated by 24 paise to reach 95.72 against the US dollar in early Monday trade. This gain followed a previous close of 95.96 on Friday, marking a reversal in the currency’s recent downward pressure.

Market participants attributed the improvement to a slight moderation in crude oil prices and positive trends in domestic equities. However, sustained importer demand for dollars and broader strength in the US dollar index continued to weigh on the local unit.

Crude oil decline supports currency

Brent crude futures fell by 2.10 percent to trade at 101.69 dollars per barrel. This drop alleviated import bill concerns, reducing the immediate pressure on the rupee from energy sector dollar purchases.

Anil Kumar Bhansali of Finrex Treasury Advisors noted that volatile crude prices had previously peaked near 109.45 dollars. The subsequent easing of supply disruption concerns helped stabilize the currency exchange rates during the session.

Equity gains boost investor sentiment

The Sensex index jumped 448.32 points to 74,743.28 in early trade, while the Nifty rose 50.3 points. These gains in domestic stocks improved overall investor confidence and supported the rupee’s valuation against the dollar.

Foreign Institutional Investors bought equities worth 599.54 crore rupees on a net basis on Friday. According to ETV Bharat, this inflow of foreign capital helped offset the outflows caused by corporate dollar demand.

Reserve decline limits upside potential

India’s forex reserves dropped by 4.924 billion dollars to 780.782 billion dollars during the week ended September 11. This reduction, driven by falls in foreign currency and gold reserves, constrains the central bank’s ability to intervene aggressively.

Anindya Banerjee of Kotak Securities expects the rupee to remain within a broad range of 95.60 to 96.50. The 96.40 to 96.50 zone is identified as a stiff resistance level that could cap further appreciation.