The rupee rose by 6 paise to 84.35 against the US dollar in morning trade on Monday, supported by strong domestic stock market trends.
Forex traders noted that the high Dollar Index and a nearly 5 per cent increase in crude oil prices over the past week, driven by the Russia-Ukraine conflict, could create challenges for the rupee.
At the interbank forex market, the rupee opened at 84.38 and moved within a narrow range, reaching 84.35, gaining 6 paise from the previous close. On Friday, the rupee had recovered from its all-time low and gained 9 paise to close at 84.41.
The rupee’s early gains were also helped by reduced selling from foreign portfolio investors (FPIs) and a rise in the stock market on Friday, according to Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP.
Bhansali also mentioned that the RBI had warned banks against speculating in USD/INR positions.
The dollar index, which measures the US dollar's strength against six major currencies, was down by 0.58 per cent at 106.93, while Brent crude fell 0.21 per cent to $75.01 per barrel.
Despite the rupee's recent gains, traders believe that the overall strength of the US dollar and high oil prices may limit further appreciation. They expect the USD/INR pair to trade within a range of 83.80 to 84.50, with the bias leaning toward the downside.
Following a victory for the ruling government in Maharashtra, India’s stock markets opened strong on Monday, with the Sensex rising by 1,289.89 points to 80,407 and Nifty gaining 405.25 points to 24,312.50.
However, foreign institutional investors (FIIs) remained net sellers on Friday, offloading shares worth Rs 1,278.37 crore.
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