Rupee Closes Higher at ₹95.70, Markets Rally on Strong Domestic Buying

The rupee ended marginally higher against the US dollar on Thursday, gaining 3 paise to settle at ₹95.70, as the benefit of a weaker greenback was largely offset by elevated crude oil prices.

The domestic currency opened at ₹95.57 against the US dollar and moved in a range of ₹95.56 to ₹95.72 during the trading session. It eventually settled at ₹95.70 on a provisional basis, compared with ₹95.73 on Wednesday.

Forex market participants said the rupee received some support from the decline in the US dollar index, but rising crude prices continued to weigh on the currency. Brent crude, the global oil benchmark, rose 2.22% to $93.65 per barrel in futures trade. Higher oil prices can increase India’s import bill and put additional pressure on the rupee.

The dollar index, which measures the greenback’s performance against six major currencies, was down 0.22% at 98.61. The index weakened after the US Treasury announced plans to double its buyback operations for longer-dated Treasury bonds, pushing US long-term yields lower and reducing the dollar’s yield advantage.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee initially benefited from a weaker dollar and gains in domestic equities but subsequently pared those gains amid rising crude prices.

He expects the rupee to trade with a slight negative bias, citing renewed geopolitical tensions between the US and Iran, higher crude prices and inflation concerns. However, expectations of a weaker dollar and diminishing rate-hike prospects could provide support at lower levels.

Choudhary expects the USD/INR spot to trade between ₹95.50 and ₹96. Market participants will also track upcoming US weekly unemployment claims for further direction.

Meanwhile, Indian equities rallied, with the Sensex surging 628.04 points to 77,537.72, while the Nifty climbed 153.55 points to 24,231.85. Foreign institutional investors remained buyers, purchasing equities worth ₹407.99 crore on a net basis on Wednesday, exchange data showed.