Rupee strengthens after two days of decline; opens higher at 88.72/$

Indian Rupee today: The domestic currency opened six paise higher at 88.72 against the greenback on Tuesday

The Indian rupee traded higher after two days of losses, as traders anticipated support from potential foreign inflows linked to ongoing initial public offerings (IPOs) during the week.

 

The domestic currency opened six paise higher at 88.72 against the greenback on Tuesday, according to Bloomberg. The currency has fallen 3.63 per cent so far this year, reaching an all-time low of 88.80 last week.

 

The Indian rupee did not receive the anticipated inflows from the two major IPOs, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said. The two major IPOs, Tata Capital and LG Electronics, will make for an active week in the primary market, with IPOs worth nearly ₹30,000 crore lined up for launch.

   

Whatever inflows came in were largely absorbed by dollar buying, as foreign portfolio investors (FPIs) continued to sell equities, albeit marginally, with net sales of ₹314 crore, analysts said. In contrast, domestic institutional investors (DIIs) were strong buyers, purchasing equities worth ₹5,036 crore. 

 

Despite the market gains, the rupee remained under pressure, touching a low of 88.79 as the Reserve Bank of India (RBI) intervened to defend the 88.80 level, keeping the currency just above it, Bhansali said. The rupee is expected to trade between 88.50 and 89.00, and a narrower band of 88.60 to 88.90, he added.

 

Given that the dollar-rupee pair has hovered near record highs through October, market participants are closely watching capital inflows and the RBI’s actions to protect the rupee from further depreciation amid persistent external pressures and domestic economic headwinds, Bhansali said. 

 

Meanwhile, India’s services activity expanded for the twenty-sixth consecutive month in September, though the pace of growth eased due to weaker international demand. The seasonally adjusted index stood at 60.9 in September, down from 62.9 in August. 

 

The dollar index rose slightly, even as the broader trend remains bearish due to expectations of the Federal Reserve's rate cut and moderating labour data. The measure of the greenback against a basket of six major currencies was up 0.04 per cent at 98.14.

 

In commodities, crude oil prices traded higher after Opec+ decided only on a modest production increase for November. Brent crude price was up 0.37 per cent at 65.71 per barrel, while WTI crude prices were higher by 0.39 per cent at 61.93 per barrel, as of 9:05 AM IST.