In early trade on Wednesday, the Indian rupee remained steady at 82.89 against the US dollar, showing resilience despite ongoing challenges. The currency faced pressure from continued foreign fund outflows and heightened demand for the American currency towards the end of the month. However, positive movements in the equity markets acted as a buffer against a sharp decline in the rupee.
Market Analysis and Factors Influencing Rupee’s Performance
Forex analysts noted that the rupee’s stability was influenced by various factors, including:
- Crude Oil Prices: The persistent rise in crude oil prices, hovering above USD 83 per barrel, exerted downward pressure on the rupee.
- Equity Markets: Positive trends in the equity markets provided support to the rupee, preventing a significant depreciation.
Anticipation of Key Economic Data
Investors awaited crucial economic data releases, including:
- US GDP Data: Cues from the US GDP data scheduled for release later in the day were anticipated to impact market sentiment.
- Domestic GDP Numbers: Additionally, market participants looked forward to domestic Gross Domestic Product (GDP) numbers expected later in the week.
Rupee’s Performance and Dollar Index
At the interbank foreign exchange, the rupee opened at 82.90 and traded marginally higher, maintaining the previous day’s closing level of 82.89 against the US dollar. On Tuesday, the rupee had settled 1 paisa lower against the dollar. Meanwhile, the dollar index, reflecting the greenback’s strength against a basket of currencies, showed a slight increase, trading at 103.92.
Market Outlook and Analyst Predictions
Gaurang Somaiya, a forex and bullion analyst at Motilal Oswal Financial Services, highlighted that the dollar index traded neutrally against its peers following reports of lower-than-expected consumer confidence index and contraction in durable goods orders in the US. He emphasized the importance of upcoming economic indicators, such as the core Personal Consumption Expenditures (PCE) price index and GDP figures, in shaping market expectations.
Somaiya projected a sideways movement for the USD-INR (Spot) pair, with an expected trading range of 82.80 to 83.20.
Other Market Indicators
In other market developments:
- Brent Crude Futures: Brent crude futures, the global oil benchmark, experienced a slight decline, trading at USD 83.24 per barrel.
- Domestic Equity Market: The 30-share BSE Sensex and the broader NSE Nifty showed marginal movements, with the Sensex trading slightly higher and the Nifty registering a modest rise.
Foreign Institutional Investors Activity
Foreign institutional investors (FIIs) were net sellers in the capital markets on Tuesday, selling shares worth Rs 1,509.16 crore on a net basis, as per exchange data.
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