The rupee made significant gains on Thursday, surging 27 paise to settle at 87 (provisional) against the US dollar. This rise was attributed to strong macroeconomic data and a decrease in crude oil prices. The US dollar index’s recent weakness also supported the local currency, although losses in domestic equities and continuous foreign capital outflows limited the rupee’s sharp gains.
Starting at 87.13, the rupee reached an intraday high of 86.94 against the greenback before closing at 87 (provisional), 22 paise higher than the previous day. The previous day, the rupee had closed 1 paisa lower at 87.22 against the US dollar.
Anuj Choudhary, a Research Analyst at Mirae Asset Sharekhan, highlighted that the rupee’s recovery was driven by positive macroeconomic data and a weakening US dollar. However, he cautioned that ongoing trade tariff issues and FII outflows could hinder significant upside movement for the rupee.
The dollar index was trading 0.12 per cent higher at 103.70, while Brent crude traded 0.37 per cent lower at $70.69 per barrel in futures trade. Despite these fluctuations, the domestic equity market experienced losses, with the Sensex ending 0.27 per cent lower and the Nifty settling 0.33 per cent down.
Data released by the government revealed that India’s retail inflation had dropped to a seven-month low of 3.61 per cent in February, opening up opportunities for the RBI to consider another interest rate cut. Additionally, the Index of Industrial Production showed growth of 5 per cent in January, driven by increased manufacturing activity.
On the global front, President Donald Trump’s decision to increase tariffs on steel and aluminium imports to 25 per cent has sparked retaliatory measures from countries like Canada and the EU. This trade tension adds uncertainty to the global economic landscape.
Overall, the rupee’s movement in the coming days will likely be influenced by global economic developments, FII flows, and domestic market trends.
These factors will shape the future trajectory of the rupee against the US dollar.
