Indian Rupee Strengthens Against US Dollar on Ceasefire Hopes
The Indian rupee rose for the second day on Wednesday. It gained 13 paise to 85.92 against the US dollar in early trade. This rise was due to hopes of a lasting ceasefire between Israel and Iran. Strong domestic equities also helped.
Early Trade Highlights
At the interbank foreign exchange, the local unit opened at 86.00. It quickly strengthened to 85.92. This was up from the previous close of 86.05.
Previous Day’s Performance
On Tuesday, the rupee saw its sharpest single-day rise in nearly five years. It surged 73 paise after Brent crude prices fell. This was due to news of a US-brokered truce between Israel and Iran.
Factors Affecting Gains
However, Wednesday’s gains were limited by a few factors:
- A slight rebound in global oil prices
- Continuing foreign fund outflows
Brent crude, which had fallen over the last two sessions, rose 1.30% to USD 68.01 per barrel in futures trade.
Expert Views
Rahul Bhansali, a forex market expert, shared his thoughts. He said, “Brent oil prices rose slightly after falling in the last two sessions. The focus is on whether the US-brokered ceasefire between Israel and Iran will hold. The White House was also close to announcing more trade deals. This raised optimism for risky assets.”
Bhansali added that the dollar “struggled to regain lost ground” on Wednesday. Investors took the chance to take on more risk amid the improved geopolitical climate. The dollar index, which measures the US currency’s strength against a basket of six currencies, was up slightly by 0.06% at 97.91.
Equity Markets
In the equity markets, a strong opening also helped rupee sentiment. The Sensex jumped 426.79 points to 82,481.90 in early trade. The Nifty advanced 123.25 points to 25,167.60.
However, foreign institutional investors (FIIs) remained net sellers. They pulled out Rs 5,266.01 crore on Tuesday, according to stock exchange data.
Previous Day’s Rebound
Earlier on Tuesday, the rupee had rebounded sharply by 75 paise. It closed at 86.03 after having plunged to a five-month low of 86.78 on Monday.
Market Watchers’ Insights
Market watchers believe a few key points:
- The truce has stabilized sentiment.
- The rupee’s path will remain sensitive to oil price changes.
- Foreign flows and global interest rate expectations will also play a part.
