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The Indian rupee strengthened against the US dollar in early trade on Thursday, gaining 11 paise to 95.17 after the latter softened following the US Federal Reserve’s latest monetary policy decision. The development offered some relief to the domestic currency, which has been facing pressure from elevated crude oil prices and firm US yields.
The rupee opened at 95.20 in the interbank foreign exchange market before moving higher. It had settled at 95.28 against the dollar in the previous trading session.
The US Federal Reserve kept its interest rates unchanged in the 3.75%–4% range, as widely expected. However, forex traders said the market response was mildly negative for the dollar.
The decision has shifted market attention to upcoming economic data, particularly inflation figures, which could shape expectations for the central bank’s next policy move.
Stronger inflation readings could reinforce expectations of a December interest rate hike. Softer numbers, meanwhile, could provide relief to bullion and emerging-market currencies.
Despite the early gains, the Indian currency still faces pressure from elevated crude oil prices and firm US yields. However, foreign exchange reserves of around USD 721 billion, recent improvements in portfolio flows, and the Reserve Bank of India’s presence in the market are providing support.
Commenting on the currency’s outlook, Anindya Banerjee, head of commodity and currency research at Kotak NEO, told PTI, “We therefore see a gradual upward bias in USD-INR within the range, rather than evidence of a disorderly move.”
The outlook suggests the rupee could continue to move in measured steps as investors assess global economic conditions and domestic market support.
Also Read: Rupee Rises to 94.62 Against Dollar: Can the Recovery Last?
The dollar index, which tracks the US currency against a basket of six currencies, slipped 0.04% to 102.15. Brent crude futures also fell 1.03% to USD 114.13 per barrel. However, elevated oil prices remain a concern for India, given their impact on the country’s import costs and dollar demand.
Domestic equity markets also traded higher during early deals on Thursday. The BSE Sensex advanced over 550 points to 73,409.06, while the NSE Nifty50 climbed above the 22,730-point mark.
Foreign Institutional Investors (FIIs) provided additional support to market sentiment, buying Indian equities worth Rs 871.83 crore on Wednesday, according to exchange data.
The rupee’s movement will remain closely linked to global market developments, crude oil prices, foreign investment flows, and the US Federal Reserve’s policy outlook.