Amidst the global tumult driven by escalating tensions in the Red Sea, the Indian rupee exhibited a steady start against the U.S. dollar on Wednesday, reflecting the prevailing risk-off sentiments. Notably, the geopolitical landscape contributed to the cautious stance in financial markets. However, the rupee found a silver lining as oil prices displayed signs of easing, providing some support.
As the trading day commenced, the Indian currency opened at Rs 83.31 against the U.S. dollar, a marginal deviation from the previous day’s closing rate of Rs 83.32, according to data reported by Bloomberg. Reliance Securities offered insights into the day’s potential trajectory, anticipating the rupee to fluctuate between Rs 83.1800 and Rs 83.4000.
Simultaneously, the dollar index, a measure of the greenback’s strength against a basket of currencies, recorded a 0.11% uptick, reaching 101.44 on Tuesday. The dynamics of the global economic landscape, geopolitical tensions, and market sentiment all played pivotal roles in influencing currency movements.
Brent crude futures, a key benchmark for global oil prices, registered a 2.13% increase, reaching $78.68 per barrel, adding another layer to the intricate financial backdrop. Domestically, the equity markets witnessed fluctuations, with the Sensex declining by 379.46 points (0.53%) to settle at 71,892.48 points. Concurrently, the Nifty recorded a drop of 76.10 points (0.35%), closing at 21,665.80 points.
Foreign Institutional Investors (FIIs) emerged as net buyers in the capital markets on Tuesday, showcasing a positive trend by acquiring shares worth INR 1,602.16 crore, according to exchange data. This external investment activity contributed to the overall market dynamics.
Shifting focus to domestic macroeconomic indicators, the Goods and Services Tax (GST) collections for December witnessed a commendable 10% surge, reaching approximately INR 1.64 lakh crore compared to INR 1.49 lakh crore in the corresponding month of the previous year. The finance ministry underscored the resilience of GST collections, highlighting a robust 12% growth during April-December 2023, accumulating INR 14.97 lakh crore against the previous year’s INR 13.40 lakh crore for the same period.
These multifaceted economic factors intricately weave into the narrative of the rupee’s performance against the U.S. dollar, creating a dynamic financial landscape shaped by global events and domestic fiscal indicators.