The Indian rupee ended the trading session on a note against the US dollar on Friday. This was due to the dollar index declining by 0.5% and positive trends in the domestic equities market. The rupee closed at 83.04 against the dollar, showing improvement compared to the closing of 83.19.
In September, despite gains, the rupee experienced a depreciation of 0.4%. This decline marks three months of depreciation for the currency.
Analysts credit the strengthening of the rupee to a reduction in India’s account deficit (CAD). Notably, CAD decreased by half to $9.2 billion, accounting for 1.1% of GDP in this year’s first quarter. This is an improvement from the year’s CAD figure of $17.9 billion, representing 2.1% of GDP, as reported by the Reserve Bank of India on Thursday.
However, foreign investors showed caution due to rising interest rates and US bond yields, which led them to continue selling activities in the market.
In general, although the rupee saw a rise because of the dollar and positive domestic factors such as the improvement in CAD, it still confronts obstacles from global economic conditions and investor sentiment. The currency market is being closely observed for any changes in the months.