The Indian rupee had a mixed trading session against the US dollar on Friday. While positive domestic equities provided some support, it faced headwinds from higher crude oil prices and a stronger US dollar.
The US inflation report, which exceeded expectations, boosted the dollar’s strength and weighed on the rupee. Nevertheless, the domestic stock market showed a bullish trend, with both benchmark indices reaching all-time highs, which helped stabilize the rupee at lower levels.
In early trading, the rupee remained within a narrow range, opening at 83.02 against the dollar and briefly touching a low of 83.07, a 4 paise drop from its previous close of 83.03.
Forex traders anticipate a slightly negative bias for the rupee, with expectations of further US dollar strength. Additionally, the rupee may face pressure due to elevated crude oil prices and foreign investors selling off their holdings. However, potential intervention by the Reserve Bank of India and positive domestic market conditions could offer support to the rupee.
Meanwhile, the dollar index declined by 0.15%, reaching 105.28, and Brent crude futures, the global oil benchmark, traded 0.95% higher at USD 94.59 per barrel.
Gaurang Somaiya, a forex and bullion analyst at Motilal Oswal Financial Services, noted that attention will be on US consumer sentiment and the Empire State manufacturing index numbers.
In the domestic equity market, the BSE Sensex rose by 102.84 points (0.15%) to 67,621.84, while the NSE Nifty increased by 30.25 points (0.15%) to 20,133.35.
Foreign Institutional Investors (FIIs) were net buyers in the capital market on Thursday, purchasing shares worth Rs 294.69 crore, according to exchange data.
Overall, the rupee’s trading outlook suggests cautiousness due to external factors like the US dollar’s strength and crude oil prices, but it may find support from positive domestic market conditions and potential central bank intervention.