Rupee advances 9 paise to close at 76.24 against U.S. dollar on fall in crude oil

The dollar index, which measures the dollar’s strength against a basket of six currencies, fell 0.16% to 98.62.

The dollar index, which measures the dollar’s strength against a basket of six currencies, fell 0.16% to 98.62.

The rupee rose further by 9 paise, closing at 76.24 against the US dollar on Friday, following a decline in crude oil prices and weakness in US currency in overseas markets.

In the interbank forex market, the local unit opened at 76.15 against the dollar and witnessed an intra-day high of 76.12 and a low of 76.29.

The rupee finished at 76.24, registering a 9 paise increase from its previous closing price of 76.33.

Meanwhile, the dollar index, which measures the dollar’s strength against a basket of six currencies, fell 0.16% to 98.62.

The rupee recovered amid dollar softening and lower crude oil prices, but slowed early gains after weaker domestic equities and outflows from foreign funds, said Dilip Parmar, Research Analyst, HDFC Securities.

Before the end of the financial year, the rupee tends to show high swings due to rebalancing-related inflows and outflows, Mr Parmar added.

USDINR risk balance remains skewed due to geopolitical concerns and broad selling by foreign institutions. USDINR spot is expected to be between 76 and 76.50 this month, medium term direction remains bullish as long as it reaches 75.70 persists,” observed Mr. Parmar.

Futures on Brent oil, the global oil benchmark, fell 1.27% to $117.52 a barrel.

According to Emkay Global Financial Services, geopolitical tensions continued to dominate market sentiment this week.

“Members of the G7 countries said they are ready to impose additional sanctions if necessary and will do everything in their power to hold Putin and his supporters accountable. The US continued to impose new sanctions on a dozen Russian defense companies are clearly concerned that the sanctions will affect the economic recovery in the future,” it said.

The price of crude oil has risen 10 percent so far this week as European countries also consider sanctions on Russian oil and gas imports. US central bankers have been very active this week as most have been unanimous in calling for aggressive rate hikes this year to curb rising US inflation.

“Any further rise in the price of crude oil next week will put pressure on the rupee, which will lead to a move towards the 77/77.14 level. On the contrary, any positive development in the Russia-Ukraine talks will rupee gain strength towards 75.77/75.50 levels,” it added.

On a weekly basis, the rupee depreciated 40 paise against the US currency.

According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the Indian rupee appreciated against the US dollar on Friday, tracking the decline in oil prices and the marginally weaker dollar.

However, the local unit ended the week weaker, largely due to volatility in crude oil prices, which dampened sentiment for risky assets in the region.

“We may see the rupee rise further to the 76.00 level next week as foreign exchange inflows are expected next week, which is usually seen at the end of the financial year,” said Mr. yer.

However, investors will remain wary of the situation in Eastern Europe and an escalation in tension there will push oil up and in turn continue to value the bias in a limited way, Iyer added.

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