Mumbai: The Indian rupee strengthened marginally against the US dollar in early trading on Friday, gaining 7 paise to reach 94.05 amid sustained foreign institutional investor (FII) inflows and softer crude oil prices.
However, broad-based strength in the American currency limited the rupee's appreciation, keeping the domestic currency within a narrow trading range.
Rupee Opens Higher
At the interbank foreign exchange market, the rupee opened at 94.07 before strengthening to 94.05 against the US dollar. The domestic currency had depreciated 41 paise to close at 94.12 on Thursday. Forex traders attributed the marginal recovery to renewed foreign investments and supportive external conditions.
Dollar Strength Limits Gains
The dollar index, measuring the greenback against six major currencies, traded marginally lower by 0.02% at 103.15. Meanwhile, Brent crude futures declined 0.37% to $95.47 per barrel.
CR Forex Advisors Managing Director Amit Pabari said the rupee's recent appreciation from 97 towards 94 could trigger a temporary correction. He indicated that USD/INR might move towards 94.50–95.00 before potentially declining towards 93.
Inflation Raises Rate Concerns
India's retail inflation climbed to 6.09% in October, exceeding the Reserve Bank of India's upper tolerance limit. The inflation spike has strengthened expectations of further RBI interest rate increases.
According to Pabari, markets anticipate additional 25-basis-point hikes in December 2026 and February 2027. Higher domestic interest rates could support the rupee by improving the attractiveness of Indian financial assets.
FII Buying Supports Currency
Foreign institutional investors purchased Indian equities worth ₹7,830.60 crore on Thursday, according to exchange data. However, domestic stock markets opened lower on Friday.
The Sensex declined 460 points to 81,441.17, while the Nifty slipped 179.05 points to 25,119.50. Currency traders will monitor foreign fund movements, crude oil prices and upcoming RBI policy decisions for further direction.
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