Mumbai, Oct — The rupee rebounded from its all-time low, appreciating by 5 paise to close at 84.05 against the US dollar on Monday, buoyed by strong domestic equity markets.
Forex traders noted that while the rupee was weighed down by a strong US dollar and elevated crude oil prices, support from the Reserve Bank of India’s (RBI) intervention, backed by record-high forex reserves, helped lift the local currency.
At the interbank foreign exchange market, the rupee opened at 84.06 against the greenback and traded within a narrow range of 84.05 to 84.07, ultimately settling at 84.05, marking a 5 paise increase from its previous close. On Friday, the rupee had fallen 12 paise to a record low of 84.10 against the US dollar.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, warned that foreign fund outflows and geopolitical uncertainties in the Middle East could create a negative bias for the rupee. “Strength in the US dollar may further pressure the rupee,” he added, though positive momentum in domestic markets could offer support. Choudhary projected the USD-INR spot price to trade within a range of 83.90 to 84.30 in the near term.
Meanwhile, the dollar index, which measures the greenback’s performance against six major currencies, rose 0.08 percent to 102.97. Brent crude, the global oil benchmark, fell 2.51 percent to USD 77.06 per barrel.
On the domestic equity front, the Sensex surged 591.69 points, or 0.73 percent, to close at 81,973.05 points, while the Nifty gained 163.70 points, or 0.66 percent, to end at 25,127.95 points.
Despite the positive equity performance, foreign institutional investors (FIIs) were net sellers on Monday, offloading shares worth Rs 3,731.59 crore, according to exchange data.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, observed that the rupee “looks vulnerable to buying by FPIs and oil companies” following the RBI’s decision to let it cross the 84.00 mark on Friday. He also pointed out that Hyundai’s IPO doesn’t seem very attractive to foreign investors.
Additionally, retail inflation for September surged to a nine-month high of 5.49 percent, driven by rising vegetable prices. This was up from 3.65 percent in August, with the last comparable peak in December 2023 at 5.69 percent.
India’s forex reserves fell by USD 3.709 billion to USD 701.176 billion for the week ending October 4, following a sharp rise of USD 12.588 billion in the prior week to an all-time high of USD 704.885 billion.
