The Indian rupee rose for the fifth consecutive session on Monday, helped by the weakness of crude oil and the dollar index.
The domestic currency started the day 27 paise stronger against the US dollar, at 85.11, compared to 85.38 on Thursday, according to data from Bloomberg. Over the past five sessions, the currency has risen by nearly ₹1.58.
With India's robust foreign exchange reserves, steady inflation, and competitive interest rates, the rupee is increasingly benefiting from this global realignment, according to Amit Pabari, managing director of CR Forex Advisors. "In the near future, the USDINR pair is anticipated to trade in the 85.00-85.50 range," he said. A clear break below 85.00 might open the door for the rupee to appreciate even more sharply.
The US dollar's value in relation to a basket of foreign currencies is measured by the dollar index, which dropped 0.89 percent to 98.34, the lowest level since April 2022. According to Pabari, the Dollar Index has dropped more than 9% so far this year, indicating that the US dollar has been under constant pressure.
This reflects rising expectations that the Federal Reserve will be forced to pivot. Given signs of economic weakness, markets are indicating that the Fed will have to lower interest rates sooner rather than later, he said. "Such a move would further weigh on the dollar's strength."
Increased foreign inflows into the equity market are supporting the domestic currency in the meantime. After a period of significant outflows earlier this month, foreign investors made nearly ₹8,500 crore in investments in the nation's equity markets last week.
Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, predicts that the Indian rupee will open at 85.20 as all assets increased against the dollar and the dollar index dropped to its lowest level in three years. According to him, markets anticipate that the Reserve Bank of India will purchase the dollar after exporters remained unhedged, which will cause the rupee to trade in the 85–85.60 range. "We wait and watch as to what happens to trade negotiations, geopolitical situations and the trade war."
Crude oil prices fell amid concerns about the impact of energy demand on the global economy, fueled by US trade. Brent crude oil fell 1.53% to $66.92 per barrel, while WTI crude fell 1.52% to $63.70 per barrel as of 9:22 AM IST.
