New Delhi, 06 November (H.S.): The Indian rupee staged a remarkable recovery in the foreign exchange market on Friday, buoyed by aggressive buying by foreign institutional investors (FIIs) in the domestic equity market. Despite mounting pressure from rising global crude oil prices and the continued strength of the US dollar, the Indian currency rebounded sharply against the greenback, reaching a level close to a six-month high.
However, the trading session began on a subdued note for the rupee, which opened lower than its previous closing level on Thursday. The situation changed shortly afterwards as substantial cash inflows from foreign investors helped stabilise the domestic currency. Supported by sustained foreign exchange inflows, the rupee staged an impressive turnaround from its early lows. The level it subsequently touched was its strongest intraday position since May 7.
In the morning session, the Indian rupee opened at 94.50 against the US dollar, weakening from its previous closing level of 94.41 on Thursday. This represented an initial depreciation of nine paise. However, the market sentiment shifted as foreign fund inflows gathered momentum. Within a short period, the rupee recovered its initial losses and began strengthening against the dollar.
The domestic currency first recovered to 94.36 against the US dollar. After remaining around that level for some time, it strengthened further to touch an intraday high of 93.87, its strongest level in six months. At around 2 pm during Friday’s trading session, the rupee was trading at approximately 93.88 against the US dollar, registering a gain of about 53 paise, or 0.56 per cent, compared with its previous closing level.
The Indian currency also recorded substantial gains against several other major international currencies. The rupee strengthened considerably against the British pound. The pound, which had closed at 127.18 in the previous trading session, declined by Rs. 0.84, or 0.66 per cent, to 126.34 amid the rupee’s appreciation. This development is expected to provide significant relief to importers sourcing goods from the United Kingdom.
Similarly, the rupee made notable gains against the euro, the common currency of the European Union. The euro, which had closed at Rs. 106.10 in the previous session, weakened by Rs. 0.75, or 0.71 per cent, to trade at Rs. 105.34 against the Indian currency.
Market experts said the rise in international crude oil prices and the recovery in the US dollar had influenced the rupee’s subdued opening during the morning session. Brent crude futures had surged by more than 2 per cent in the global market, once again crossing the $100-per-barrel mark. Since India imports a substantial portion of its crude oil requirements from international markets, rising oil prices increase demand for US dollars, a development generally considered unfavourable for the domestic currency. In addition, the US Dollar Index, which measures the greenback’s strength against a basket of six major international currencies, was trading 0.35 per cent higher at 101.90, exerting further pressure on the rupee during early trade.
Against these challenging global conditions, investments by foreign institutional investors in the Indian equity market proved to be a major source of support for the domestic currency. According to official data, foreign investors had emerged as net buyers in the Indian stock market during the previous trading session, purchasing shares worth approximately Rs. 14,974.68 crore. These substantial investments helped improve the availability of foreign currency, particularly US dollars, in the foreign exchange market.
Market experts believe that the underlying strength of the Indian equity market, coupled with sustained investments by foreign investors, could help maintain the rupee’s upward momentum in the coming days. However, fluctuations in crude oil prices, influenced by continuing tensions between Russia and Ukraine as well as developments in the Middle East, could moderate the currency’s gains.
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Hindusthan Samachar / Jun Sarkar
