Rupee Recovers 10 Paise to 91.80 Against US Dollar Amid Market Movements
The rupee made a slight recovery of 10 paise, trading at 91.80 against the US dollar during early trading on Tuesday. This recovery comes as the dollar index begins to retreat from its recent highs.
Factors Influencing the Rupee’s Recovery
– Dollar Index Decline: The dollar index fell sharply to a four-month low of 96.80, a decrease of 0.98% over the past month, contributing to the rupee’s positive movement.
– Forex Traders’ Insights: Traders noted that the rupee gained ground as they sought to cover the broad weakness of the dollar.
Key Metrics
– Opening Value: The rupee opened at 91.80, marking a 10 paise increase from its previous close.
– Historic Low: On Friday, the rupee hit a record low of 92 per dollar but managed to settle at 91.90 against the dollar.
– Market Closure: Both forex and equity markets were closed on Monday in observance of Republic Day.
Market Sentiment and Outlook
– Geopolitical Pressures: According to Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, the rupee remains under pressure due to global geopolitical uncertainties, weak domestic equities, and persistent dollar demand. Until these issues are resolved, the rupee may continue to be vulnerable.
– Pending Trade Agreements: The future of the rupee is closely tied to the pending trade agreement with the US, which could act as a stabilizing factor.
Additional Market Insights
– US Tariff Impact: US Treasury Secretary Scott Bessent pointed out a potential pathway to removing the 25% tariffs on India’s Russian oil purchases, a move that could ease trade tensions.
– Impacts of Foreign Investment: The forecast indicates continued pressure on the rupee, linked to Foreign Portfolio Investors (FPIs) selling off equities and debt, compounded by weakness in the Indian stock market.
Financial Data Snapshot
– Dollar Index: Currently trading 0.02% lower at 97.01.
– Brent Crude: The global oil benchmark is priced 1.26% lower at USD 64.42 per barrel.
– Domestic Market Performance: The Sensex fell by 417.68 points to 81,120.02, and the Nifty dropped by 111.1 points to 24,937.55.
– FPIs Selling: On Friday, FPIs offloaded equities worth Rs 4,113.38 crore.
Foreign Exchange Reserves Update
India’s foreign exchange reserves surged by USD 14.167 billion, bringing the total to USD 701.36 billion as of January 16, while previous weeks saw an increase of USD 392 million to USD 687.193 billion.
Conclusion
The rupee’s recovery to 91.80 against the US dollar, despite its recent struggles, signals a cautious optimism in the market. However, ongoing geopolitical tensions and foreign investment trends will continue to play a significant role in the rupee’s performance moving forward. Analysts emphasize the need for stability in trade relations and investment confidence to ensure sustained recovery.