The rupee started the day lower but managed to end on a positive note, gaining 3 paise to close at 86.59 (provisional) against the US dollar. This modest recovery came despite continued foreign fund outflows and month-end dollar demand. The support from positive domestic equities helped offset some of the downward pressure on the rupee.
Forex traders noted that the rupee faced challenges from sustained foreign fund outflows and the overall strength of the US dollar in the global markets. Oil importers’ relentless demand for dollars and weak risk appetite further weighed on the Indian currency.
Opening at 86.63, the rupee oscillated between a high of 86.59 and a low of 86.65 against the greenback during the trading session. Ultimately, it settled at 86.59 (provisional), marking a 3-paise increase from its previous close.
Anuj Choudhary, a Research Analyst at Mirae Asset Sharekhan, attributed the rupee’s decline to month-end dollar demand from importers and FII outflows. Despite the pressure from a stronger US dollar, positive domestic market sentiment provided some support to the rupee.
In the broader market, the dollar index, which measures the dollar against a basket of major currencies, was up by 0.46% at 108.29. Meanwhile, Brent crude, the global oil benchmark, traded 0.44% lower at USD 76.53 per barrel in futures trading.
Looking ahead, Choudhary anticipated a negative bias for the rupee due to dollar strength, persistent FII outflows, and month-end dollar demand. The rupee could also be impacted by uncertainties surrounding US tariff policies. However, potential central bank interventions may help stabilize the currency.
The Economic Survey for 2024-25, presented by Finance Minister Nirmala Sitharaman, emphasized the need for strategic policy management and strengthening domestic fundamentals to navigate global challenges. The survey projected GDP growth of 6.3-6.8% in the fiscal year 2025-26, driven by solid fundamentals, fiscal discipline, and stable private consumption.
Amidst cautious investor sentiment ahead of the Union Budget on February 1, the benchmark indices – BSE Sensex and Nifty – posted gains of 0.97% and 1.11%, respectively. Foreign Institutional Investors (FIIs) continued to offload equities worth Rs 4,582.95 crore on a net basis on Thursday.
Overall, the rupee’s resilience in the face of external pressures, coupled with positive domestic cues, underscored the currency’s ability to weather challenges in the global economy.
