The Indian rupee strengthened by 14 paise to close at 95.33 per US dollar on Friday, supported by lower global oil prices and a weaker dollar index. Despite this recovery, the currency remains under pressure from foreign investor selling and ongoing geopolitical tensions in West Asia.
The Indian rupee ended the trading session on Friday at 95.33 against the US dollar, marking an improvement of 14 paise. This recovery was largely influenced by two major global factors: the softening of the US dollar index and a decline in international crude oil prices. When crude oil prices fall, it typically helps the rupee because India imports a large portion of its oil, reducing the overall demand for foreign currency.
At the interbank foreign exchange market, the rupee opened the day at 95.27. Throughout the session, it moved within a range of 95.22 to 95.42, eventually settling near its daily high. Meanwhile, the dollar index, which tracks the strength of the greenback against six major world currencies, traded lower by 0.04% at 100.86, providing some relief to emerging market currencies like the rupee.
Despite the positive close, the currency market continues to navigate complex challenges. Geopolitical instability in West Asia remains a point of concern for financial markets, creating uncertainty that often leads to volatility. Additionally, Indian equity markets have seen consistent selling by Foreign Institutional Investors (FIIs), which adds downward pressure on the local currency. Exchange data indicated that FIIs sold Indian stocks worth Rs 532.86 crore in the previous session, a trend that investors often monitor closely as it reduces the supply of dollars flowing into the domestic market.
Domestic stock markets provided a contrasting picture, showing resilience despite the currency fluctuations. The Sensex climbed 1.08% to end at 77,569.39, while the Nifty rose 1.02% to reach 24,206.90. This positive performance in shares likely helped limit the rupee's decline during the day. Brent crude, the global oil benchmark, traded down 0.62% at USD 75.83 per barrel at the time of the market close.
Moving forward, the rupee's stability will largely depend on the balance between domestic equity flows and global external pressures. Investors will track whether foreign selling in Indian stocks continues in the coming weeks and how fluctuations in oil prices and the dollar index evolve in response to the situation in West Asia.