The Indian rupee appreciated by 4 paise to settle at 94.84 against the US dollar on Thursday, marking a modest gain driven by positive cues from domestic equity markets and sustained foreign capital inflows.
Market Dynamics
At the interbank foreign exchange market, the rupee opened at 94.87 and moved in a tight range before closing at 94.84, up from its previous close of 94.88. The local unit witnessed a intra-day high of 94.82 and a low of 94.90 against the greenback.
Supporting Factors
Forex traders attributed the rupee's strength to a robust rally in domestic stocks, with benchmark indices hitting fresh record highs. The Sensex surged over 300 points, while the Nifty crossed the 22,000 mark for the first time. Additionally, foreign portfolio investors (FPIs) remained net buyers in the capital markets, injecting fresh funds that bolstered the rupee.
Global Cues
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading marginally lower at 104.01. Brent crude oil prices, a key determinant of India's import costs, eased slightly to $82.50 per barrel, providing further relief to the rupee.
Outlook
Analysts expect the rupee to trade in a narrow range in the near term, with the Reserve Bank of India's intervention likely to prevent sharp volatility. The currency is likely to take cues from global risk sentiment, crude oil prices, and the trajectory of foreign fund flows.
