Mumbai: rupee appreciated 20 paise to 94.25 against the US dollar in early trade on Monday, supported by easing crude oil prices, although a strong US dollar and tepid investor risk appetite weighed on sentiment.
Forex traders said the rupee opened on a positive note with oil prices remaining supportive and foreign inflows improving. The overall bias remains positive for the rupee, they said, adding that the immediate hurdle remains the US dollar, which continues to hold strong near a 13-month high.
In the interbank foreign exchange market, the rupee opened at 94.36, then gained momentum and touched 94.25, registering a gain of 20 paise from the previous low.
On Thursday, the rupee settled at 94.45 against the US dollar.
Indian stock, currency and commodity markets were closed on Friday due to Muharram.
“The rupee may remain under pressure amid a strong US dollar and the risk of a rebound in crude oil prices, although bond inflows may provide some support. Technically, 93.50–94.10 is a strong support zone, while a break above 94.80 could pave the way to 95.30–95.50,” Adbaritors CRMD said.
Meanwhile, India’s foreign reserves rose by $963 million to $672.587 billion during the week ended June 19, the RBI said on Friday. In the previous reporting week, total reserves had fallen by $9.985 billion to $671.625 billion.
According to Pabari, a sustained gain in India’s foreign reserves indicates that the Reserve Bank is rebuilding its buffer after months of heavy dollar selling.
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, traded at 101.37, up 0.02 percent.
Brent crude, the global oil benchmark, traded higher by 0.72 percent at $72.51 a barrel in futures trade.
“Brent crude has fallen to around $72 a barrel, the lowest in four months, after falling more than 10 percent in just one week. Tankers are moving freely through the Strait of Hormuz again and Gulf supply is returning to normal. For a country that imports most of its crude, that means an easier import bill and softer demand for the dollar,” said Pabari.
On the domestic equity market front, Sensex fell 63.65 points to 77,047.63 in early trade, Nifty edged up 16.55 points to 24,070.20.
Foreign institutional investors bought shares worth Rs 383.76 crore on a net basis on Thursday, according to exchange data.
