Despite trading above the 87 mark against the US dollar, the Indian rupee has shown remarkable strength over the past two sessions. After gaining 12 paise on Tuesday, the domestic currency extended its upward trend on Wednesday, closing 20 paise higher. Analysts attribute this rebound to a weaker dollar, falling crude oil prices, and easing domestic inflation.
However, foreign institutional investors (FIIs) have not yet halted their withdrawals from Indian equity markets, which has capped the rupee’s gains to some extent.
According to currency market data, the rupee closed provisionally at 87.43 per dollar on Wednesday, strengthening by 20 paise from its previous close. The interbank foreign exchange market opened with the rupee at 87.63 and saw fluctuations between 87.72 and 87.28 during the day. On Tuesday, the currency had ended at 87.63, up 12 paise from the previous session.
In the global market, the US dollar index, which tracks the greenback’s performance against six major currencies, slipped 0.44% to 97.66. Indian equity markets also posted strong gains, with the Sensex jumping 304.32 points to close at 80,539.91 and the Nifty rising 131.95 points to settle at 24,619.35. International benchmark Brent crude declined 0.54% to $65.76 per barrel.
Data from stock exchanges revealed that FIIs were net sellers on Tuesday, offloading shares worth ₹3,398.80 crore.
Commenting on the development, Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said that easing inflation and robust domestic markets boosted the rupee’s performance. He expects the local currency to maintain a positive bias, supported by a weaker US dollar, softening crude prices, and improving global risk sentiment.