Rupee Reclaims Momentum: Steady Flows and Softer Dollar Support Gains

Image Source: The Economic Times

The Indian rupee ended slightly stronger at 88.1950 per U.S. dollar, supported by exporter inflows and a softer greenback globally. Easing crude oil prices and steady foreign fund participation helped balance importer demand. Traders maintained cautious optimism ahead of key U.S. data that could influence the dollar’s near-term trajectory.

The Indian rupee appreciated marginally on Wednesday, closing at 88.1950 per U.S. dollar compared to its previous finish of 88.2650. The domestic currency found support from dollar weakness in overseas markets and light exporter inflows, even as importers continued to hedge positions ahead of month-end settlements.

Market participants noted that improved sentiment in equity markets and easing Brent crude prices, which hovered near 81 dollars per barrel, provided further relief to the rupee. The Reserve Bank of India (RBI) was said to have maintained a steady presence through state-run banks to manage volatility.

Market Dynamics:

The rupee recovered 7 paise as the dollar index slipped below 104 amid renewed risk appetite in global markets.
Healthy equity inflows and lower crude costs reduced outflow pressure on the domestic currency.

Oil and Import Demand:

Softer global oil trends trimmed dollar demand from refiners.
However, end-of-month importer hedging limited larger gains for the rupee.

Foreign Fund Flows:

Foreign institutional investors remained net buyers in domestic equities, offering additional support.
Bond yields held steady near 7.22%, reflecting stable sentiment in the debt market.

Global Cue Watch:

Investors await key U.S. GDP and inflation data later this week for insights into the Federal Reserve’s rate outlook.
Asian currencies also strengthened modestly, with the Japanese yen and South Korean won logging similar gains.

Outlook Ahead

Analysts see a near-term consolidation in the 88.05–88.35 band unless major global factors trigger a breakout. Traders cited that sustained FII inflows and a benign oil environment could aid the rupee’s resilience despite geopolitical uncertainties. Overall sentiment remains cautiously constructive heading into November.

Sources: Reserve Bank of India data, NSE currency trading statistics, Reuters FX wire, Bloomberg terminal updates, Economic Times forex summary.

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