Rupee rises 18 paise to close at 85.23 against US dollar

Mumbai, Apr 28 (PTI) The rupee appreciated 18 paise to close at 85.23 against the US dollar on Monday, supported by sustained foreign fund inflows, easing crude oil prices and a bullish trend in domestic equities.

Forex traders said strong domestic fundamentals, such as rising forex reserves also boosted investor sentiments.

At the interbank foreign exchange, the domestic unit opened at 85.29 and moved between the intra-day high of 84.96 and the low of 85.42 against the greenback. The unit ended the session at 85.23, registering a gain of 18 paise over its previous closing level.

On Friday, the rupee settled lower by 8 paise at 85.41 against the US dollar.

Forex traders said a steady rise in reserves enhances India's import cover, providing a crucial buffer against external shocks and lending stability to the rupee.

However, the rupee could face pressure amid any escalation in tensions between India and Pakistan as geopolitical uncertainties like these tend to drive investors toward safer assets, causing outflows from emerging markets and weakening local currencies like the rupee.

"The RBI was present near 85.00 but with reserves touching almost USD 688 billion and India continuing to be the MFN (most-favoured nation) for investing, the selling of dollar continues as we await for the details of the Indo-American trade deal," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.13 per cent at 99.60.

Brent crude, the global oil benchmark, fell 0.46 per cent to USD 66.56 per barrel in futures trade.

"The Indian rupee struck a confident pose at the start of the week, emerging as the top performer among its Asian counterparts. A swift recovery in domestic equities from Friday's dip, propelled by steady foreign investment and a calm geopolitical landscape, provided significant tailwinds," Dilip Parmar, Research Analyst, HDFC Securities said.

Further buttressing the rupee's ascent was India's expanding foreign exchange reserves, coupled with a stable performance from the dollar index, Parmar said, adding that for the immediate future, the USD-INR pair is likely to find support at 84.90 and resistance at 85.70.

In the domestic equity market, the 30-share BSE Sensex jumped 1,005.84 points or 1.27 per cent to 80,218.37, while the Nifty advanced 289.15 points or 1.20 per cent to 24,328.50.

Foreign institutional investors (FIIs) bought equities worth Rs 2,474.10 crore on a net basis on Monday, according to exchange data.

"The rupee is expected to be in the range of 84.75-85.50 on Tuesday with risk to the downside of USD-rupee pair. Forward premiums have risen by about 50 bps in 1 month while they have risen by 25 bps on 1-year term," Bhansali said.

India's forex reserves jumped USD 8.31 billion to USD 686.145 billion for the week ended April 18, the RBI said on Friday.

This is the seventh consecutive week of a rise in the kitty, which had jumped by USD 1.567 billion to USD 677.835 billion in the week ended April 11. Forex reserves had touched an all-time high of USD 704.885 billion at end-September 2024. PTI DRR TRB TRB TRB

Source: PTI