The rupee appreciated 14 paise to 86.46 against the U.S. dollar in morning trade on Monday (January 20, 2025). Image for representative purposes only
| Photo Credit: Reuters

The rupee appreciated 14 paise to 86.46 against the U.S. dollar in morning trade on Monday (January 20, 2025), tracking a positive trend in domestic equities and Asian currencies.

Forex traders said factors like elevated Dollar Index level as well as surging crude oil prices pose significant headwinds for the USD/INR pair.

At the interbank foreign exchange, the rupee opened at 86.48 and touched 86.46 against the greenback, registering a gain of 14 paise over its previous close.

On Friday (January 17, 2025), the rupee had settled at 86.60 against the U.S. dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.22% at 109.10.

Brent crude, the global oil benchmark, fell by 0.12% to $80.69 per barrel.

The overall strength of the American currency and elevated crude oil prices are likely to strain India’s trade balance, creating challenges for sustained rupee appreciation, forex traders said.

As Asian currencies rose Indian rupee opened on a positive note against the U.S. dollar and is expected to trade within a range of 86.40/70 for the day which could become volatile as it progresses, Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

“Dips are still busy for importers as we expect the rupee to depreciate by ₹1.50 to 88.00 by March to bring the real effective exchange rate (REER) towards 105 levels,” Mr. Bhansali added.

On the domestic equity market front, the 30-share sensitive index Sensex climbed 398.21 points to 77,017.54 in early trade; Nifty was up 105.15 points to 23,308.35.

Foreign Institutional Investors (FIIs) remained net sellers in the capital markets on Friday (January 17, 2025), as they offloaded shares worth ₹3,318.06 crore, according to exchange data.

India’s forex reserves dropped by $8.714 billion to $625.871 billion in the week ended January 10, the RBI said on Friday (January 17, 2025).

Earlier, the overall kitty dropped by $5.693 billion to $634.585 billion in the week ended January 3, the Reserve Bank of India said.

Image for representative purposes only
| Photo Credit: Reuters

The rupee depreciated 16 paise to close at 86.56 (provisional) against the U.S. dollar on Thursday (January 16, 2025), dragged down by a strong American currency overseas, elevated crude oil prices and foreign fund outflows.

“However, positive domestic equity markets provided some cushion at the lower level,” forex traders said.

At the interbank foreign exchange, the rupee opened at 86.42 and touched the intraday high of 86.37 before ending the session at 86.56 (provisional) against the greenback, 16 paise lower from the previous close.

The local unit settled with a gain of 13 paise at 86.40 against the dollar on Wednesday (January 15, 2025), a day after rebounding 17 paise from its lowest-ever level.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee declined due to increased demand for dollars by importers.

“Importers may continue to buy dollars, which may further pressurise the rupee. Traders may take cues from retail sales and weekly unemployment claims data from the US. USD-INR spot price is expected to trade in a range of ₹86.35 to ₹86.75,” he said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.05% higher at 108.97.

Brent crude, the global oil benchmark, fell 0.12% but stayed elevated at ₹81.93 per barrel in futures trade.

Analysts said concerns over geopolitical uncertainties will likely add volatility in the dollar and crude until the U.S. gets a new administration under President Donald Trump next week.

In the domestic equity market, the 30-share BSE Sensex climbed 318.74 points, or 0.42%, to settle at 77,042.82 points, while the Nifty rose 98.60 points, or 0.42%, to 23,311.80 points.

Foreign institutional investors (FIIs) offloaded equities worth ₹4,533.49 crore on Wednesday (January 15, 2025).