The Indian rupee saw a small gain of 8 paise in early trade on Monday, opening at ₹82.99 against the U.S. dollar. The rupee’s appreciation was mainly due to a weaker greenback in overseas markets, which supported the local currency.
The rupee had closed the last session at ₹83.07 against the greenback. Analysts pointed out that the slide was propelled by muted demand for the dollar and a Dollar Index pullback on the eve of crucial inflation numbers from the U.S., scheduled to be unveiled on Tuesday.
Investors closely watch the U.S. inflation numbers, which will decide global currency movements over the next couple of days. Weaker-than-anticipated inflation data might see a drop in the U.S. Dollar Index to around 102.50, benefiting emerging market currencies such as the rupee. Conversely, a stronger reading might push the index to 105 levels, but market participants are of the view that the USD/INR pair is expected to remain in the 82.75-83.25 zone.
The dollar index, which measures the strength of the dollar against a basket of six major currencies, fell 0.07% to trade around the 104 level. At the same time, international oil prices moved lower, with Brent crude futures falling 0.51% to $81.77 per barrel. Lower oil prices are usually positive for India’s trade balance, considering the nation’s reliance on oil imports.
Back in the homeland, Indian share markets began on a somber note. The BSE Sensex fell by 140 points to trade around 71,454, and the NSE Nifty fell by almost 40 points to 21,743. The cautious mood is an indication of investors awaiting global economic signals and inflation updates.
Despite the mixed performance in equities, foreign institutional investors (FIIs) remained net buyers in the Indian markets, purchasing equities worth over ₹140 crore in the previous trading session—signaling continued confidence in the country’s economic outlook.
To add to the upbeat mood, India’s forex reserves witnessed a major rise. According to recent weekly statistics, reserves gained by $5.7 billion at a total value of $622.47 billion. This demonstrates the country’s robust macroeconomic fundamentals as well as the resilience to cushion any external economic blow.
Overall, the rupee’s initial gain, supported by positive global cues and high forex reserves, indicates a cautiously optimistic mood for the Indian economy in the short run.
