The rupee rebounded sharply and settled with a gain of 20 paise at 86.92 (provisional) against the US dollar on Friday, as the American currency index declined to its five-month-low and crude oil prices eased on lower demand expectations.
Volatile domestic equity market sentiment and uninterrupted outflow of foreign capital, however, weighed on the domestic currency, forex traders said, attributing foreign investors’ outflow to increased risk aversion due to tariff ambiguity worldwide.
At the interbank foreign exchange, the rupee opened at 87.13 and touched an intra-day low of 87.22 against the greenback. The unit strengthened during intra-day trade to 86.88, before ending at 86.92 (provisional) against the dollar, 20 paise higher from its previous close.
The rupee had settled 6 paise lower at 87.12 against the US dollar on Thursday, snapping its three-session rally. It had gained 31 paise in the preceding three consecutive sessions.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.43 per cent at 103.58, close to the level seen on November 5, 2024.
Brent crude, the global oil benchmark, went up by 1.41 per cent, but stayed at six-month low levels of $70.44 per barrel in futures trade.
“Profit-booking in crude oil seems to have driven prices higher,” said Mohammed Imran, Research Analyst, Mirae Asset Sharekhan.
Economic data points for crude oil demand are not encouraging, as Chinese imports fell 5 per cent year-on-year to 83.85 million tonnes for the January-February period. “That translates to an average of about 10.42 million barrels per day (bpd), down from 11.26 million bpd in January-February 2024,” Imran said.
The domestic equity market settled almost flat, with the 30-share BSE Sensex falling 7.51 points, or 0.01 per cent, to 74,332.58, and the Nifty inching up 7.80 points or 0.03 per cent to 22,552.50 points. Both the indices had gained sharply in the preceding two sessions.
Foreign institutional investors (FIIs) offloaded equities worth ₹2,377.32 crore on a net basis on Thursday, according to exchange data.
On the global macroeconomic front, traders are expected to keep a close watch on the US Federal Reserve chief Jerome Powell’s commentary and the central bank’s balance sheet to be released later in the day.
Meanwhile, President Donald Trump said he has postponed 25 per cent tariffs on most goods from Mexico for a month after a conversation with that country’s president.
Trump’s announcement comes after his Commerce Secretary Howard Lutnick said tariffs on both Canada and Mexico would “likely” be delayed.