Daijiworld Media Network - Mumbai
Mumbai, May 22: The Indian rupee strengthened for the second consecutive session on Friday, closing sharply higher at 95.60 against the US dollar amid easing crude oil prices and suspected intervention by the Reserve Bank of India.
Forex traders said market sentiment improved after comments from Marco Rubio indicated that diplomatic discussions related to the Iran situation were moving in a constructive direction. Positive domestic equity markets and a decline in US Treasury yields also supported the rupee.
At the interbank foreign exchange market, the rupee opened at 96.30 against the US dollar and remained firm throughout the session before settling at 95.60, gaining 76 paise over its previous close.
On Thursday, the rupee had already rebounded by 50 paise from its all-time closing low to settle at 96.36 against the dollar.
Anuj Choudhary said uncertainty surrounding the US-Iran situation could continue to pressure the rupee, although optimism over possible peace talks and softer crude prices may support the domestic currency at lower levels. He added that easing US Treasury yields were also favourable for the rupee.
According to him, the USD-INR spot price is expected to trade in the range of 95.50 to 96.30.
Sahil Kapoor said investors should consider buying rupee-denominated assets rather than betting against the Indian currency. He noted that currencies, interest rates and capital flows are cyclical in nature, and current conditions favour investments in domestic equities and bonds.
Dilip Parmar said the rupee’s recovery was largely driven by active market intervention by the RBI following its USD-INR buy-sell swap announcement, along with easing geopolitical risks and lower imported commodity prices. He said technical resistance for spot USD-INR was seen at 96.20, while support remained at 95.40.
Meanwhile, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was trading at 99.29, down 0.04 per cent.
Global oil benchmark Brent crude was trading 2.18 per cent higher at USD 104.82 per barrel in futures trade.
On the domestic equity front, the BSE Sensex rose 231.99 points to close at 75,415.35, while the Nifty 50 gained 64.60 points to settle at 23,719.30.
Foreign Institutional Investors offloaded equities worth Rs 4,440.47 crore on a net basis on Friday, according to exchange data.
The RBI also said India’s forex reserves declined by USD 8.094 billion to USD 688.894 billion during the week ended May 15. In the previous week, reserves had risen by USD 6.295 billion to USD 696.988 billion.