Rupee gains 9 paise to 95.65 against US dollar in early trade

MUMBAI: The rupee gained 9 paise to 95.65 against the US dollar in early trade on Friday, backed by the weakening of the American currency in the overseas markets.

Key points

• While the Nifty skid 5.75 points to 24, 223.10, on the domestic market front, Sensex was trading lower by 25.97 points to 77, 506.51 in early trade.
• So far, around USD 56.85 billion has already been mobilised, including USD 52.3 billion through FCNR(B) deposits, CR Forex Advisors MD – Amit Pabari remarked.
• At the interbank foreign exchange, the rupee opened at 95.69, then rose to 95.65, higher by 9 paise from its previous close.
• It gauges the greenback's strength against a basket of six currencies, was trading lower by 0.15 per cent at 98.74, its lowest level since May.
• Foreign institutional investors offloaded equities worth Rs 583.36 crore on a net basis on Thursday, according to exchange data.

Forex traders remarked for India, a softer dollar is being offset by another challenge elevated crude oil costs.

Meanwhile, RBI Governor Sanjay Malhotra has indicated that the central bank expects at least USD 80 billion of foreign currency inflows.

While the RBI Governor's statement offered some reassurance, elevated oil rates, persistent geopolitical uncertainty, and a structurally reduced foreign presence continue to neutralise fresh dollar inflows, according to forex traders.

On Thursday, the rupee pared initial gains and settled for the day down 1 paisa at 95.74 against the US dollar.

"Governor Sanjay Malhotra indicated that the central bank expects at least USD 80 billion of foreign currency inflows from the measures confirmed earlier this year to attract dollars into India. So far, around USD 56.85 billion has already been mobilised, including USD 52.3 billion through FCNR(B) deposits, " CR Forex Advisors MD – Amit Pabari remarked.

Nevertheless, Unlike the famous FCNR(B) scheme of 2013. It sparked an immediate double-digit appreciation in the rupee, this year's inflows have not translated into meaningful currency strength. Since the RBI confirmed these measures in June, the rupee has barely responded, Pabari went on.

Meanwhile, the dollar index. It gauges the greenback's strength against a basket of six currencies, was trading lower by 0.15 per cent at 98.74, its lowest level since May.

As the geopolitical situation in the Middle East remains tense, with fresh warnings from US President Donald Trump to countries supporting Iran, brent crude, the global oil benchmark, was trading lower by 0.23 per cent at USD 93.56 per barrel in futures trade.

"The conflict has already disrupted more than 20 per cent of the region's refining capacity, while the Strait of Hormuz remains shut, restricting fuel exports from one of the world's most important energy routes, " Pabari continued.

Taken together, the developments around rupee gains 9 paise to 95.65 against US dollar in early trade point to a situation that is still moving, and the coming days should bring more clarity.