Rupee appreciates 19 paise to 86.79 against US dollar in early trade

The rupee appreciated 19 paise to 86.79 against the US dollar in early trade on Thursday, as the American currency and crude oil prices retreated from their elevated levels.

Forex traders said there is a negative bias for the USD/INR pair amid a muted trend in domestic equities and the unabated foreign fund outflow is weighing on investor sentiments.

At the interbank foreign exchange, the rupee opened at 86.88 and gained further ground to trade at 86.79 against the greenback during early deals, up 19 paise from its previous close.

On Tuesday, the rupee depreciated 10 paise to close at 86.98 against US dollar.

 

The forex market was closed on Wednesday on account of 'Chatrapati Shivaji Maharaj Jayanti'  Meanwhile, the US dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.16 per cent lower at 107.

Brent crude, the global oil benchmark, fell 0.34 per cent to $75.78 per barrel in futures trade.

Forex traders said on the domestic front, India's economy is expected to demonstrate a strong momentum in the second half of the year but the rupee is battling global headwinds.

According to an article on 'State of the Economy' published in RBI's February bulletin, high frequency indicators, like vehicles sales, air traffic, steel consumption and GST E-way bills, point towards a sequential pickup in momentum of economic activity during the second half of the fiscal 2024-25 and sustain moving forward.

However, a strong dollar, driven by US economic resilience and trade policy pivots, could exacerbate capital outflows from emerging economies, push risk premiums higher, and intensify external vulnerabilities, it added.

"The USD/INR pair is expected to trade within a range of 86.6087.20. The 87.20 level is emerging as a strong resistance, while 86.50 is acting as a critical support zone, A breach below 86.50 could open up a path for 85.80-86.00 levels," CR Forex Advisors MD Amit Pabari said.

In the domestic equity market, the 30-share BSE Sensex was trading 297.33 points, or 0.39 per cent, lower at 75,641.85 points, while the Nifty was down 69.25 points, or 0.3 per cent, at 22,863.65 points.

Foreign institutional investors (FIIs) offloaded equities worth Rs 1,881.30 crore on net basis on Wednesday, according to exchange data.