Mumbai, March 3: The Indian rupee strengthened by 9 paise to reach 87.28 against the US dollar in early trade on Monday, driven by a retreat in the American currency and signs of recovery in domestic equity markets after encouraging macroeconomic indicators.
The positive shift in investor sentiment follows recent data released by the government on Friday, revealing that India's economy grew at 6.2% during the October-December quarter, marking a recovery from a seven-quarter low. Forex traders anticipate this growth will help slow down the recent trend of foreign capital outflows.
However, the rupee's gains were somewhat constrained by ongoing volatility arising from US tariff uncertainties, which have also led to a rise in crude oil prices.
Rupee Opens Stronger; Dollar Index Weakens
At the interbank foreign exchange, the rupee opened at 87.36 against the dollar and quickly appreciated further to touch 87.28, reflecting an increase of 9 paise compared to its previous close. The domestic currency had depreciated by 19 paise on Friday, closing at 87.37 against the greenback.Meanwhile, the US dollar index, measuring the strength of the American currency against a basket of six major global currencies, dipped by 0.34% to 107.19.
Crude Oil Prices Rise Slightly
In the global market, Brent crude oil futures climbed by 0.59%, reaching USD 73.24 per barrel, influenced by the lingering uncertainty related to US tariffs.Domestic Equity Markets in Positive Territory
Reflecting broader economic optimism, domestic equity indices traded positively during the morning session. The benchmark BSE Sensex climbed 167.25 points, or 0.23%, to 73,365.35, while the NSE Nifty rose 69.65 points, or 0.31%, to 22,194.35.RBI’s USD 10 Billion Dollar-Rupee Swap Receives Robust Demand
On Friday, the Reserve Bank of India (RBI) successfully conducted a USD 10 billion dollar-rupee swap auction aimed at injecting long-term liquidity into the banking system. The settlement of this swap auction is scheduled to occur in two tranches on March 4 and March 6. Under this agreement, participating banks sold US dollars to RBI, with a commitment to repurchase the currency at the end of the swap period.Foreign Investors Remain Cautious
Despite improved economic data, Foreign Institutional Investors (FIIs) continued their selling streak, offloading equities worth Rs 11,639.02 crore on Friday, according to the latest exchange data.Forex Reserves Rise Sharply
India’s foreign exchange reserves rebounded significantly in the week ending February 21, increasing by USD 4.758 billion to USD 640.479 billion, reversing the previous week's decline of USD 2.54 billion.Strong GST Collections Point Towards Economic Revival
Data released on Saturday further bolstered positive sentiment as gross Goods and Services Tax (GST) collections grew by 9.1% year-on-year to approximately Rs 1.84 lakh crore in February, signaling an uptick in domestic consumption and potential economic revival.Fiscal Deficit Remains High
In contrast, fiscal deficit data showed continued fiscal pressures, reaching 74.5% of the annual target at the end of January 2025, up from 63.6% in the same period a year ago, according to the Controller General of Accounts (CGA).Investors and traders will closely monitor these evolving macroeconomic signals and global market trends, which continue to influence the direction of the rupee and broader economic stability.
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