Indian rupee staged a strong recovery today and soared by 75 paise to end at 86.03 (provisional) against the US dollar after firm losses yesterday. According to forex traders, this rebound was on the back of easing global crude oil prices and positive indications by the domestic equity markets.
Rupee opened at 86.07, then fluctuated in a narrow gap of 85.91 to 86.27 to settle at 86.03 at the interbank foreign exchange market. This is a significant gain compared to its last close of 86.78, a five-month low on Monday, when the rupee had lost 23 paise in a tussle of geopolitical uncertainty.
A major reason which helped the rupee rally was the extent of reduction in global oil prices. Following a ceasefire agreement between Iran and Israel declared by US President Donald Trump, Brent crude, the international oil index, tumbled by 3.19% to USD 69.20 per barrel. The relaxation in the tension in the Middle East gave way to the hope of better stability in the world, and there followed a lesser concern regarding the crude demand, which in turn eased pressure on the oil-importing economies, however vulnerable such an economy can be, as in the case of India.
Also, the US dollar was weakened in the international market, which is further support for the emerging market currencies. The dollar index that gauges the strength of the greenback against six leading currencies dropped by 0.48 per cent to 97.94.
There were also positive sentiments on domestic equities. The BSE Sensex added 158.32 points to close at 82,055.11, and the NSE Nifty gained 72.45 points to settle at 25,044.35, with both indices posting a strong performance.
Nonetheless, foreign institutional investors (FIIs) also continued to be on a selling spree in the domestic equity market, dumping stocks to the tune of 1,874.38 crore on Monday as per the exchange data. Nonetheless, the rupee was sturdy as it was supported by tailwinds throughout the world and the home front.
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