Image used for representational purposes only. | Photo source: REUTERS
The rupee rose 9 paise to 83.37 against the US dollar early in Friday’s session, following good sentiment in domestic equity markets and a delicate US currency against key rivals abroad.
Forex traders, however, claimed that the outflow of foreign funds and elevated crude oil prices had a negative impact on the Indian currency.
On the interbank market, the domestic unit opened strongly at 83.40 and touched an intra-day high of 83.36 against the dollar.
Later in morning trade, the local unit was quoted at 83.37 per dollar, registering an augment of 9 paise from the previous closing level. The rupee fell 3 paise to 83.46 against the dollar on Thursday.
According to Gaurang Somaiya, forex and bullion analyst at Motilal Oswal Financial Services Ltd, the dollar weakened against major crossroads after the US Federal Reserve left its key interest rate unchanged for the sixth consecutive time.
Moreover, continued pressure and a tight labor market indicated that progress towards bringing inflation back to the 2% target this year was stalling.
Analysts also say market participants are expected to closely monitor U.S. nonfarm payrolls data released on Friday. Beyond that, weekly unemployment claims, the trade balance and U.S. factory order data will likely provide further clues.
“Today the focus will be on non-farm payrolls data, which are expected to be slightly lower and may negatively impact the dollar. In addition to the employment data, the services PMI data is also likely to trigger volatility in the dollar. We expect USD-INR (spot) to trade sideways and quote in the range of 83.20-83.50,” Somaiya said.
India’s manufacturing PMI declined to 58.8 in April 2024 from 59.1 in the previous month, the monthly survey showed.
However, HSBC India’s seasonally adjusted Purchasing Managers’ Index (PMI) recorded the second fastest improvement in operating conditions in three-and-a-half years, supported by buoyant demand.
Meanwhile, the dollar index, which measures the dollar’s strength against a basket of six currencies, fell 0.04% to 105.13. Brent crude futures, the global crude oil benchmark, rose 0.36% to $83.97 a barrel.
On the domestic equity market, the 30-share BSE Sensex was trading 463.87 points or 0.62% higher at 75,074.98. The broader NSE Nifty index rose 136.65 points or 0.60% to 22,784.85.
Foreign institutional investors (FIIs) were net sellers in the capital markets on Thursday as they sold shares worth ₹ 964.47 crore on a net basis, according to exchange data.