Indian Rupee opens at 86.41/$, strengthens for seventh straight day

The Indian rupee opened stronger for the seventh consecutive session on Thursday, tracking a fall in the US dollar index. 

 

The domestic currency opened 2 paise stronger at 86.41 against the greenback after closing at 86.43 on Wednesday, according to Bloomberg data. The rupee has appreciated by 1.27 per cent in March so far, mainly triggered by the fall in the dollar index. Meanwhile, during the current financial year, it witnessed a 3.5 per cent fall. 

 

The reason for the Reserve Bank of India (RBI) allowing the rupee to appreciate could be that the regulator has asked banks to cut long-arbitrage positions in non-deliverable forwards (NDF), according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. "The rupee is set to open higher at 86.35, a two month high, despite a general fall in Asian currencies."

 

Meanwhile, foreign institutional investors turned net sellers on Wednesday, offloading Rs 1,096.5 crore from Indian equities. Global funds have pulled out Rs 1.46 trillion from domestic stocks so far this year.  

 

"The USD-INR pair is expected to trade between 86.00 and 86.80 in the near term," Amit Pabari, managing director at CR Forex Advisors, said. With FII outflows and liquidity deficit conditions persisting, a slight rebound towards the 86.50-86.60 range is likely, he said. "However, as conditions improve, every uptick could present a selling opportunity, potentially driving the rupee towards the 85.80 level." 

 

US Federal Reserve Chair Jerome Powell said that there is still room to cut rates later in the year, adding that President Donald Trump’s polices as one reason why inflation is reigniting. 

 

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 103.39. The Fed’s stance kept the US dollar resilient, with the dollar index expected to remain range-bound between 103 and 104 in the short term. However, expectations of 2025 rate cuts could limit further upside, with a potential move toward 102 levels if economic conditions soften.

 

Crude oil prices rose on Thursday amid uncertainty acknowledged by Powell regarding Trump's polices. Brent crude oil was up 0.44 per cent to $71.09 per barrel, while WTI crude was up 0.40 per cent at 67.43 per barrel as of 8:50 AM IST.