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 9 paise to close at 85.73 (provisional) against the U.S. dollar on Thursday (January 2, 2025), as strong dollar demand from importers and foreign fund outflows dented investor sentiments.

Forex traders said the dollar gained against most currencies during 2024 and continued to remain on a strong footing this year. Moreover, persistent foreign fund outflows further dented investors’ sentiments.

Additionally, global markets are expected to see low volumes as the holiday season is underway in major economies like those in Europe.

t the interbank foreign exchange, the rupee opened on a weak note and witnessed an intra-day low of 85.79 and a high of 85.68 against the American currency. The local unit settled for the day at 85.73 (provisional), registering a fall of 9 paise over its previous close amid a sharp recovery in domestic equities.

On Wednesday (January 1, 2024), the rupee settled flat at 85.64 against the U.S. dollar.

On December 27, the local currency touched its lifetime intra-day low of 85.80 against the greenback.

“We expect the rupee to trade with a negative bias on strength in the US Dollar and dollar demand from importers. Sustained FII outflows may further pressure the rupee,” said Anuj Choudhary — Research Analyst at Mirae Asset Sharekhan.

“However, any intervention by the Reserve Bank of India (RBI) may support the rupee at lower levels. USDINR spot price is expected to trade in a range of 85.50 to 86, Choudhary added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.02% lower at 108.46.

Brent crude, the global oil benchmark, rose 0.91% to $75.32 per barrel in futures trade.

Meanwhile, India’s manufacturing sector growth fell to a 12-month low in December, as new business orders and production expanded at softer rates, a monthly survey said on Thursday (January 2, 2025).

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index was at 56.4 in December, down from 56.5 in November, indicating a weaker improvement in operating conditions.

In the domestic equity market, the 30-share BSE Sensex settled at 1,436.30 points, or 1.83%, up at 79,943.71 points, while the Nifty was higher by 445.75 points, or 1.88%, to 24,188.65 points.

Foreign Institutional Investors (FIIs) offloaded ₹1,782.71 crore in the capital markets on a net basis on Wednesday (January 1, 2025), according to exchange data.

On the domestic macroeconomic front, the total gross goods and services tax (GST) revenue grew 7.3% to ₹1.77 lakh crore in December as compared to ₹1.65 lakh crore in the same month a year ago.

In November, GST mop-up was Rs 1.82 lakh crore with 8.5% annual growth. The highest-ever collection was in April 2024 at over ₹2.10 lakh crore.