The Indian Rupee also traded on a slightly positive note as it gained a single paisa to end the trading session on Monday at 94.15 (provisional) versus the US Dollar. The local currency continued to be threatened in the face of world uncertainties, increasing crude oil prices, and geopolitical tensions in West Asia although there was a slight upswing.
The rupee started the day at an interbank foreign exchange market at 94.25 and moved in a tight range throughout the day. It hit a high of 94.11 and a low of 94.28 and then fell a bit higher. Forex traders observed that the rupee was able to rebound on the initial losses but the overall sentiment remains negative.
A sustained selling by foreign institutional investors (FIIs) and high global crude oil prices are some of the major considerations that weigh on the rupee and raise India import bill. Brent crude, the international standard, held its own, and further curtailed any serious appreciation of the domestic currency.
In the meantime, the dollar index that shows the strength of the US dollar relative to a basket of major currencies drifted down slightly, providing slight assistance to the rupee. In domestic market, the equity markets remained resilient, as both Sensex and Nifty recorded high gains and this is an indication of positive investor sentiment.
On an encouraging note, the foreign exchange reserves of India have increased to more than 703 billion, as per the Reserve Bank of India, which gives the reserves protection against external volatility.
All in all, although the rupee has been slightly stable, analysts think that its trend will remain reliant on international forces, oil prices and capital flows in the near days.