Indian Rupee logs longest winning streak in six months amid Dollar weakness

Indian Rupee closed stronger against the US Dollar for the fifth consecutive session on Tuesday even as foreign portfolio  investors continued their selling spree amid rising crude oil prices. 

 

The local unit ended 23 paise stronger at 86.57 against the US Dollar after closing at 86.80 on Monday, according to Bloomberg data. The domestic currency logged its fifth straight day of gains, the longest since September last year. 

 

The Rupee extended its gains to 1.08 per cent in March after seeing five consecutive months of decline. Meanwhile, global funds have sold Rs 1.43 trillion so far this year while having sold Rs 4,488 crore on Monday, according to NSE data.  

 

The Dollar index — a measure of the value of the US Dollar relative to a basket of foreign currencies — was down 0.04 per cent at 103.32. The index is down over 3.6 per cent this month, the highest since November 2022. 

 

India’s merchandise trade deficit plummeted to a three-and-a-half-year low of $14.05 billion in February, as exports and imports saw a sharp contraction due to softening global petroleum prices and rising economic uncertainty.  

 

Crude oil prices advanced for the third straight day amid escalating tensions in the Middle East. Brent crude oil was up 1.45 per cent to $72.10 per barrel, while WTI crude was up 1.55 per cent at 68.63 per barrel as of 3:20 PM IST. 

 

The banking system continues to face a liquidity shortfall, with the deficit standing at approximately Rs 2 trillion as of March 16, according to Pabari. “This shortfall is likely to force the Reserve Bank of India to absorb a significant portion of the inflows to manage liquidity and rebuild forex reserves.“

 

The banking system continues to face a liquidity shortfall, with the deficit standing at approximately Rs 2 trillion as of March 16, according to Pabari. “This shortfall is likely to force the Reserve Bank of India to absorb a significant portion of the inflows to manage liquidity and rebuild forex reserves.“

 

Meanwhile, Indian benchmark indices -- Nifty, and Sensex -- advanced over 1 per cent on Tuesday along with the broader markets, buoyed by upbeat global sentiments and strong domestic institutional buying.   With investment sentiment improving in India, rupee strength is likely to sustain unless external factors such as US data or Fed policy shift market dynamics, according to Jateen Trivedi, VP research analyst - commodity and currency, LKP Securities. "The rupee range has now shifted higher to 86.25-86.90, reflecting the current momentum and capital flow trends."