The rupee strengthened by 10 paise to settle at 94.50 (provisional) against the US dollar on Wednesday, supported by easing crude oil prices and a retreat in the US dollar index from recent highs.
According to forex market participants, the domestic currency opened on a firm note as Brent crude slipped below the USD 79-per-barrel mark, with investors increasingly factoring in the reopening of the Strait of Hormuz following the recently announced US-Iran peace framework.
Gains in domestic equity markets further boosted sentiment and provided additional support to the Indian currency. In the interbank foreign exchange market, the rupee opened at 94.46 against the greenback and moved within a range of 94.29 to 94.60 during the session. It eventually closed at 94.50 (provisional), marking a gain of 10 paise from its previous close.
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On Tuesday, the rupee had ended marginally lower by 2 paise at 94.60 against the US dollar. Despite Wednesday's recovery, the USD/INR pair has appreciated by more than 140 paise over the last four trading sessions, reflecting the broader strength of the US currency during that period.
Forex analysts noted that softer crude oil prices and sustained foreign capital inflows continue to improve the near-term outlook for the rupee. “We expect the rupee to maintain a positive bias amid improving global market sentiment and declining crude oil prices. Weakness in the US dollar and easing US Treasury yields may also provide support,” said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan.
Choudhary added that investors are likely to remain cautious ahead of the US Federal Reserve's upcoming monetary policy announcement. “The Fed is expected to leave interest rates unchanged. We expect the USD-INR spot rate to trade in the range of 94.10 to 94.85,” he said.
CR Forex Advisors Managing Director Amit Pabari said market participants remain focused on the formal signing of the US-Iran agreement scheduled in Geneva on June 19. “Until the agreement is formally signed, the recovery remains encouraging but investors may still remain cautious,” Pabari observed.
Meanwhile, the dollar index, which measures the performance of the US currency against a basket of six major global currencies, was trading at 99.57, up 0.03 per cent. Brent crude, the international oil benchmark, slipped 0.08 per cent to USD 78.90 per barrel in futures trading. On the domestic stock market, benchmark indices ended higher. The Sensex advanced 347.14 points to close at 77,155.62, while the Nifty gained 96.55 points to settle at 24,085.70.
According to exchange data, foreign institutional investors (FIIs) remained net sellers and offloaded equities worth ₹749.18 crore on Tuesday.
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