Rupee Eases: Rises 39 Paise to 92.75 Against US Dollar as Geopolitical Tensions Ease, Foreign Inflows Boost Sentiment; Brent Crude Slips to $98 Per Barrel

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Rupee Rises: The Indian rupee strengthened by 39 paise to 92.75 against the US dollar in early trade on Friday, supported by easing geopolitical tensions, positive domestic equity markets and fresh foreign fund inflows. At the interbank foreign exchange market, the rupee opened at 92.93 and advanced further to 92.75 against the greenback. On Thursday, the local currency had settled 19 paise higher at 93.14 per dollar.

The main trigger for the rupee’s gains appears to be improving global risk sentiment after signs of possible de-escalation in West Asia.

Why Is the Rupee Rising Today?

Market participants tracked reports suggesting efforts to stabilise the region, including a 10-day ceasefire between Israel and Lebanon. China has also reportedly urged Iran to ensure safe passage through the Strait of Hormuz, a crucial global energy shipping route. Any easing in regional tensions typically helps emerging market currencies like the rupee by reducing risk aversion.

According to Reuters, Anil Bhansali, head of treasury at Finrex Treasury Advisors, said that the RBI is taking on more steps to support the currency, which will help the rupee push higher at open. He pointed out that the rupee would be opening on a positive note despite the rise in oil prices on Thursday and weak Asian cues. “Not sure how durable the impact will be, and we see limited downside for dollar/rupee from here, likely capped around 92.75,” he said.

How Did Crude Oil Prices React?

Another supportive factor was softer crude oil prices. Brent crude slipped 1.16 percent to $98.24 per barrel in futures trade. Lower oil prices are generally positive for India, which imports a large share of its crude requirements. A lower oil bill can reduce pressure on the rupee and improve external balances.

The Iran war and the Strait of Hormuz blockade have kept oil prices unstable, but recent ceasefire negotiations have allayed immediate supply worries.

Are Foreign Investors Buying Indian Stocks?

Fresh buying by Foreign Institutional Investors also aided sentiment. According to exchange data, FPIs turned net buyers on Thursday, purchasing equities worth Rs 382.36 crore. Foreign inflows usually increase demand for rupees as overseas investors convert dollars into local currency to buy Indian assets.

Following weeks of foreign outflows motivated by geopolitical unpredictability and rising oil costs, the pattern represents a reversal.

How Are Domestic Equities Performing?

Domestic equities also opened higher, reflecting improved sentiment. The BSE Sensex rose 290 points to 78,291.81 in early trade, while the Nifty 50 gained 82.67 points to 24,277.53. The positive equity market further supported the rupee by attracting foreign and domestic investment.

What Is Limiting Further Rupee Gains?

Despite the rise, traders said the rupee remains under some pressure due to continued firmness in the US dollar. The dollar index, which measures the greenback against six major currencies, was slightly higher at 98.07. A strong dollar globally tends to weigh on emerging market currencies.

Analysts also noted that the rupee’s upside may be limited. Bhansali of Finrex Treasury Advisors said the downside for dollar/rupee is likely capped around 92.75, suggesting the rupee may not strengthen much further from current levels.

FAQs: Rupee’s Rise

Q: How much did the rupee gain against the dollar?

A: The rupee strengthened by 39 paise to 92.75 per dollar in early trade on Friday.

Q: Why is the rupee rising?

A: West Asian geopolitical tensions are lessening, crude oil prices are declining, foreign investors are purchasing, and local stocks are rising.

Q: What is the price of Brent crude?

A: Brent crude slipped 1.16% to $98.24 per barrel.

Q: How much did foreign investors buy?

A: FPIs purchased equities worth Rs 382.36 crore on Thursday.

Q: How did the stock market perform?

A: Sensex rose 290 points to 78,291, and Nifty gained 82 points to 24,277.

Q: What is capping further rupee gains?

A: A firm US dollar index at 98.07 and analyst expectations that dollar/rupee downside is capped around 92.75.

Disclaimer: This information is based on inputs from news agency reports. TSG does not independently confirm the information provided by the relevant sources.