Rupee Rebounds as Hints of FPI Inflows Revitalize Investor Sentiment.
The Indian rupee concluded Friday at 94.21 against the US dollar, successfully breaking a four-day streak of depreciation. This stabilization was attributed to a modest influx of foreign investments into Indian equities coupled with a decline in the global dollar index. The rupee had previously closed at 94.39 per dollar, reflecting a positive shift influenced by global market dynamics. The dollar index retreated from 101.4 to 100.7, largely driven by a lackluster US jobs report that has tempered expectations for a near-term interest rate hike by the Federal Reserve, thereby bolstering Asian currencies.
As per data from the National Stock Exchange, global funds emerged as net buyers in the Indian capital markets, acquiring equities worth ₹1,355 crore on Friday, while domestic funds appeared to be more cautious, acting as net sellers. The rally in the rupee, driven by improved sentiment in the international market and a softer dollar, may also reflect a temporary correction from its recent decline. However, analysts like Jateen Trivedi of LKP Securities stress that traders remain vigilant as potential geopolitical developments, particularly concerning the US-Iran and Russia-Ukraine situations, pose risks to global market stability when trading resumes after the weekend.
Despite this temporary recovery, the rupee has shown a depreciation of 0.4% since the start of the fiscal year. Market forecasts suggest that the currency could oscillate between 95 and 95.50 in the immediate future. A notable decrease in trading volumes from foreign banks further emphasizes the cautious mood, particularly given the Fourth of July holiday in the US, which kept market activity subdued. As the outlook for the rupee remains closely tied to both domestic and international factors, investors are advised to monitor geopolitical developments that could impact market sentiment in the coming days.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)