Supported by equities, rupee appreciates 16 p to 82.82 against US dollar

The rupee appreciated 16 paise to 82.82 against the US dollar in early trade on Friday supported by positive domestic equities, as the interim budget focused on higher capex and faster fiscal consolidation.

Forex traders said the interim budget had a positive impact on the domestic currency as it highlighted a reduction in the fiscal deficit to 5.1 per cent of GDP for FY25.

Moreover, the weakness of the American currency in the overseas market also boosted sentiments.

At the interbank foreign exchange, the rupee opened at 82.91 against the dollar and then touched a high of 82.82, registering a gain of 16 paise over its previous close.

The rupee appreciated by 6 paise to close at 82.98 against the US dollar on Thursday after the government hinted at faster fiscal consolidation and lower borrowings in interim budget for 2024-25.

Finance Minister Nirmala Sitharaman on Thursday hiked capital expenditure by 11 per cent for the next fiscal to sustain a world-beating economic growth rate while trimming the deficit in a reform-oriented interim budget.

Continuing on the fiscally prudent path, the Modi government in the interim budget refrained from announcing populist measures, which will help it trim the fiscal deficit to 5.1 per cent of the GDP next fiscal and 4.5 per cent in FY26.

According to CR Forex Advisors MD-Amit Pabari, for FY24 the deficit is lowered to 5.8 per cent, against the projected 5.9 per cent. The government's decision to raise the capital expenditure target to a historic Rs 11.11 lakh crore aims to stimulate demand and consumption in the economy.

"The expectation of a credit rating upgrade increases as fiscal consolidation and lower borrowing costs suggest an improvement in the fiscal profile. This could be significant positive news for the rupee," Pabari said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.03 per cent lower at 103.01.

Brent crude futures, the global oil benchmark, rose 0.48 per cent to USD 79.08 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 706.5 points or 0.99 per cent higher at 72,351.80 points. The broader NSE Nifty advanced 226.65 points or 1.04 per cent to 21,924.10 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday as they offloaded shares worth Rs 1,879.58 crore, according to exchange data.