Mumbai: The Indian rupee strengthened by 5 paise to 94.46 against the US dollar in early trade on Friday, September 4. Rising foreign inflows and improved risk appetite supported the domestic currency.
At the interbank foreign exchange market, the rupee opened at 94.53 against the greenback before recovering to 94.46. It had closed at 94.51 on Thursday after gaining 22 paise, marking its fifth consecutive session of appreciation.
RBI measures boost forex liquidity
Market sentiment improved after India mobilised a record $127.23 billion through foreign-currency deposits under a special Reserve Bank of India programme designed to strengthen foreign-exchange liquidity.
When overseas foreign-currency borrowings and external commercial borrowings are included, total inflows under the measures reached $136.377 billion, according to RBI data.
Amit Pabari, Managing Director of CR Forex Advisors, said the FCNR inflows had provided significant support to the rupee. However, risks linked to oil prices and geopolitical developments remain.
The 94.00–94.20 range is expected to offer strong support. Any negative surprise, particularly a sharp increase in crude oil prices, could push the USD-INR pair towards 95.00, 95.50 and eventually 96.00.
Crude oil and US-Iran tensions pose risks
The dollar index rose 0.15% to 99.05 as renewed US-Iran tensions increased demand for safe-haven assets.
Brent crude futures gained 0.40% to $95.90 per barrel amid concerns about possible disruption to oil supplies through the Strait of Hormuz. Higher crude prices generally put pressure on the rupee because India imports a large share of its energy requirements.
Domestic stock markets provided additional support. The Sensex jumped 468.64 points to 76,621.50, while the Nifty gained 42.10 points to trade at 23,915.55.
Foreign institutional investors purchased Indian equities worth ₹2,345.87 crore on Thursday, according to exchange data.
