The Indian rupee appreciated by 28 paise to 96.25 against the US dollar in early trade on Monday, buoyed by a retreat in the American currency index and strong buying in domestic equities, according to forex traders.
At the interbank foreign exchange market, the rupee opened at 96.18 but soon lost some ground to trade at 96.28 against the greenback. This marks a gain of 28 paise from its previous close. On Friday, the rupee had settled 20 paise higher at 96.53 against the US dollar.
Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, was trading down by 0.26% at 101.04. Brent crude, the global oil benchmark, saw a decline of 4.17% to USD 92.74 per barrel in futures trade, attributed to easing tensions in West Asia as the US and Iran paused military strikes.
“He's giving it a little bit of room. We've had both Oman and Iran, and a number of our other negotiators, engaged at every level, from the most senior levels all the way down to the technical level over the past few weeks, and particularly in the past few days.”
Mike Waltz, US Ambassador to the United Nations
On the domestic front, the equity markets showed a positive trend with the Sensex rising by 613.80 points, or 0.81%, to 76,673.57, and the Nifty climbing 165.40 points, or 0.70%, to 23,931.55. However, Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,892.77 crore on a net basis on Friday.
US President Donald Trump is reportedly allowing diplomatic talks some space, as stated by Mike Waltz, the US ambassador to the United Nations, who highlighted ongoing negotiations involving Oman, Iran, and other parties.
Background
The rupee's appreciation against the dollar comes amid a backdrop of fluctuating global oil prices and geopolitical tensions. The easing of tensions in West Asia has provided some relief to the markets, which could influence the rupee's trajectory in the coming days.
The rupee's performance will be closely watched in the coming days, particularly in light of ongoing geopolitical developments and their impact on global oil prices. Market participants will also monitor domestic equity trends and foreign investment flows for further cues.
