The Indian rupee strengthened sharply by 40 paise to 85.05 against the US dollar in early trade on Monday, supported by a weak US dollar index and buoyant domestic equity markets, forex traders said.
The foreign capital inflow and the Reserve Bank of India’s (RBI) announcement of a record dividend payout to the government for fiscal year 2025 also bolstered the local currency, experts added.
The domestic unit opened at 85.02 and firmed up further to 84.98 before trading at 85.05 in initial deals, marking a significant gain from its previous close. On Friday, the rupee had surged 50 paise to settle at 85.45 against the greenback.
The rupee’s gains mirror global trends of selling the dollar amid rising yields on American long-term bonds and ongoing trade uncertainties, market participants noted.
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, declined 0.34 per cent to 98.67.
Also read: Fall in dollar index lets rupee settle at 85.25
Global crude benchmark Brent oil rose 0.32 per cent to USD 64.99 per barrel in futures trading.
The domestic equity market mirrored this optimism with the 30-share BSE Sensex advancing 630.68 points, or 0.77 per cent, to 82,351.76. The NSE Nifty also rose 187 points, or 0.75 per cent, to 25,040.15.
Foreign institutional investors (FIIs) continued to back the markets by purchasing equities worth Rs 1,794.59 crore on a net basis on Friday, according to exchange data.
Meanwhile, the RBI’s weekly data revealed that India’s foreign exchange reserves dropped by USD 4.888 billion to USD 685.729 billion for the week ending May 16.
Market analysts said attention now turns to this week’s release of industrial and manufacturing production data for April, along with the first-quarter GDP growth numbers, which are expected to shed light on the country’s economic trajectory.
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