The Indian rupee made a modest recovery on Thursday morning, gaining 14 paise to trade at 83.05 against the US dollar. This rebound comes as the dollar retreated from its recent highs following indications from the US Federal Reserve about potential rate cuts later this year.
At the interbank foreign exchange market, the rupee opened at 83.07 against the US dollar, showing strength compared to its previous closing value of 83.19. During early trading, the local currency fluctuated within a narrow range of 83.08 to 83.04.
By 9:25 AM, the rupee was trading at 83.05 per dollar, reflecting a 14-paise gain from the previous close. The currency had recently fallen to a two-month low of 83.19 on Wednesday, largely due to a robust US dollar and rising crude oil prices ahead of the Federal Reserve’s policy announcement.
The recovery in the rupee’s value is attributed to the US Federal Reserve’s recent decision to keep interest rates unchanged, coupled with its signal of three possible rate cuts this year despite persistent inflation. This dovish stance from the Fed has led to a decline in the US dollar index, which measures the greenback’s strength against a basket of six major currencies. As of Thursday morning, the index was trading 0.20% lower at 103.22.
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In contrast, Brent crude futures saw a 0.63% increase, reaching USD 86.49 per barrel, as they recovered from previous losses. Higher crude oil prices can often impact emerging market currencies, including the rupee, but the Fed’s rate cut signals appeared to have a more immediate impact on currency trading.
On the domestic front, the Indian equity markets also showed positive movement. The Sensex surged by 538.01 points to reach 72,639.70, while the Nifty gained 162.90 points, settling at 22,002.
However, foreign institutional investors (FIIs) were net sellers in the capital markets on Wednesday, offloading shares worth Rs 2,599.19 crore, according to exchange data. Despite this outflow, the rupee’s recovery indicates a positive sentiment in the forex market driven by the Federal Reserve’s monetary policy outlook.
