Indian Rupee Gains Ground Against US Dollar in Early Trade

The Indian rupee strengthened by 9 paise to 87.79 against the US dollar during early trading on October 24, 2023. This rise was supported by a decline in global crude oil prices and growing optimism regarding a potential trade deal between India and the United States. Despite this positive momentum, outflows from foreign institutional investors (FIIs) limited the rupee’s gains, according to forex traders.

At the interbank foreign exchange market, the rupee opened at 87.78 before slipping slightly to 87.79, which marked a decrease of 9 paise from the previous close. The currency had appreciated by 5 paise to close at 87.88 against the dollar on the preceding day, October 23. Notably, the Reserve Bank of India (RBI) intervened in the market on Thursday, ensuring the rupee remained below the 88.00 mark, aligning with the rising optimism surrounding the potential trade negotiations.

Market Influences and Trends

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, commented on the situation, stating that the RBI’s presence in the market at 87.95 helped stabilize the rupee. He noted, “The rupee closed with optimism of a US-India trade deal at its peak. Global sentiment remains mixed as oil prices move higher.” Currently, the dollar index, which measures the currency’s strength against a basket of six others, was trading 0.08 percent higher at 99.01.

In terms of oil prices, Brent crude, the global benchmark, was trading lower by 0.55 percent at USD 65.63 per barrel in futures trade. After experiencing a more than 5 percent increase on Thursday due to US sanctions on two Russian oil companies—responsible for over 5 percent of the world’s total oil output—Brent prices showed stability. Bhansali highlighted that the prices reflected one of the most significant weekly rebounds in approximately four months.

Domestic Market Reactions

On the domestic equity front, the Sensex index fell by 153.18 points to 84,403.22 in early trade, while the Nifty index declined by 51.1 points to 25,840.30. Furthermore, data from exchanges indicated that foreign institutional investors sold equities worth Rs 1,165.94 crore on Thursday, contributing to the cautious approach in the market.

As the trading day unfolds, market participants will be closely monitoring both domestic and international developments that could further impact the rupee and overall economic sentiment.