Mumbai, Feb 14 (PTI) The rupee extended its recovery and settled 21 paise higher at 86.71 against the US dollar on Friday supported by easing American currency and positive macroeconomic numbers.
Forex traders said the aggressive dollar chase was halted after the US government announced the implementation of reciprocal tariffs on April 1, giving trading partners some relief.
However, higher crude oil prices and incessant selling of domestic equities by foreign institutional investors weighed on the local unit, forex traders said.
At the interbank foreign exchange, the rupee opened at 86.86 and touched the high of 86.71 against the greenback during intraday. It also touched the low of 86.90 before ending the session at 86.71 against the dollar, logging a gain of 21 paise from its previous close.
On Thursday, the rupee settled almost flat with a marginal gain of 2 paise at 86.93 against the US dollar. The unit had closed 16 paise lower on Wednesday, a day after surging 66 paise, witnessing the highest single-day rise in nearly two years.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee gained on the weak US dollar index.
He further said that the US dollar declined as President Donald Trump delayed the implementation of reciprocal tariffs to April 1 which calmed market nerves.
“Persistent outflows by FIIs may pressurise the rupee further. However, any further intervention by the RBI may support the rupee at lower levels. Traders may take cues from retail sales and industrial production data from the US, Choudhary said, adding the “USD-INR spot price is expected to trade in a range of 86.60 to 87.10”.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said the rupee traded positive as the sliding dollar and lower domestic inflation numbers helped its recovery after a sharp fall to 88.00.
“Market participants will closely watch core retail sales and retail sales data from the US, which could bring another round of volatility in the dollar index, keeping the rupee on edge. Range for the rupee is seen between 86.40-87.25 in the near-term,” he said.
Meanwhile, the country’s wholesale price inflation moderated marginally to 2.31 per cent in January due to the decline in prices of food items especially vegetables, government data released on Friday showed.
The Wholesale Price Index (WPI) based inflation was 2.37 per cent in December 2024. It was 0.33 per cent in January 2024.
The domestic unit has been facing extreme volatility for the past few months due to several global macroeconomic uncertainties.
Finance Minister Nirmala Sitharaman on Thursday said the rupee along with other Asian currencies has depreciated against the US dollar on account of uncertainty pervading the global macroeconomy.
“Quarter four of 2024, certainly witnessed extensive currency-related volatility across major countries, not just India. Indian rupee, like other Asian currencies, depreciated against the US dollar on account of uncertainty pervading the global macro economy,” Sitharaman said in her reply to a discussion on the Union Budget 2025-26 in Rajya Sabha.
She said that the US Dollar Index rose to 6.5 per cent during October 21, 2024 to January 27, 2025.
On Friday, the US dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.59 per cent lower at 106.68.
Brent crude, the global oil benchmark, rose 0.47 per cent to USD 75.37 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex declined 199.76 points, or 0.26 per cent, to settle at 75,939.21, while the Nifty fell 102.15 points, or 0.44 per cent, to 22,929.25 points.
Foreign institutional investors (FIIs) offloaded equities worth Rs 4,294.69 crore on net basis on Friday, according to exchange data. PTI HVA DRR
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