The Indian rupee strengthened by 11 paise to trade at 95.17 against the US dollar in early trade on Thursday.
Local currency sentiment was buoyed by a pause in US Federal Reserve interest rates and a rally in domestic stock indices.
Foreign Institutional Investors provided further support to the rupee by turning net buyers with equities purchases worth ₹871.83 crore.
Rupee Trades Against US Dollar Amid Global Currency Trends And Domestic Market Gains
Indian currency appreciates supported by a steady US Federal Reserve stance, positive domestic equity trends, and lower crude oil prices
Summary
The rupee appreciated 11 paise to 95.17 against the US dollar in early trade on Thursday amid a slight easing of the American currency following the US Federal Reserve's policy announcement.
The US Fed kept interest rates unchanged at 3.75 per cent–4.00 per cent as widely expected, but the market reaction turned mildly dollar-negative, forex traders said.
At the interbank foreign exchange market, the rupee opened at 95.20, then gained ground and touched 95.17 against the US dollar, registering a rise of 11 paise over its previous close.
On Wednesday, the rupee closed at 95.28 against the American currency.
According to traders, elevated crude oil prices and firm US yields remain headwinds for the local unit. While foreign exchange reserves of around USD 721 billion, recent improvement in portfolio flows and the RBI's presence in the market provide support.
"We therefore see a gradual upward bias in USDINR within the range, rather than evidence of a disorderly move," said Anindya Banerjee, Head of Commodity and Currency Research, Kotak NEO.
The Fed's pause has left markets highly sensitive to incoming data: stronger inflation could reinforce expectations of a December hike, while softer numbers could offer relief to bullion and emerging-market currencies.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 102.15, lower by 0.04 per cent.
Brent crude, the global oil benchmark, was trading lower by 1.03 per cent at USD 114.13 per barrel in futures trade.
On the domestic equity market front, Sensex rose 163.03 points to 73,409.06, while Nifty gained 40.40 points to 22,739.25.
Foreign Institutional Investors (FIIs) bought equities worth Rs 871.83 crore on a net basis on Wednesday, according to exchange data.
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