The rupee made a strong recovery on Friday, closing 20 paise higher at 86.92 (provisional) against the US dollar. This uptick was driven by a decline in the American currency index to its lowest level in five months and a decrease in crude oil prices due to lower demand expectations.
Despite the positive performance of the rupee, volatile sentiments in the domestic equity market and continuous outflow of foreign capital were a cause for concern. Foreign investors seemed to be pulling out due to increased risk aversion resulting from global tariff uncertainties.
Opening at 87.13, the rupee saw a low of 87.22 during the day before strengthening to 86.88. It eventually settled at 86.92 against the dollar, marking a gain of 20 paise from the previous close. This followed a 6 paise decline on Thursday after three consecutive days of gains.
On the global front, the dollar index was down by 0.43% at 103.58, nearing its levels from November 5, 2024. Meanwhile, Brent crude prices rose by 1.41% but remained at a six-month low of $70.44 per barrel in futures trade.
In terms of economic data, there were concerns about crude oil demand as Chinese imports fell by 5% year-on-year for the January-February period. This translates to an average of about 10.42 million barrels per day, down from 11.26 million barrels per day in the same period in 2024.
The domestic equity market closed almost flat, with the Sensex falling marginally and the Nifty inching up slightly. Foreign institutional investors offloaded equities worth ₹2,377.32 crore on Thursday, as per exchange data.
Looking ahead, traders are likely to monitor the commentary from US Federal Reserve chief Jerome Powell and the central bank’s balance sheet due later in the day. Additionally, President Donald Trump announced a postponement of 25% tariffs on most goods from Mexico for a month, following discussions with the country’s president. This decision came after Commerce Secretary Howard Lutnick suggested that tariffs on both Canada and Mexico would also likely be delayed.
