The Indian rupee showed strength in early trade on Monday, May 29, 2023, gaining 6 paise against the US dollar to reach 82.54. This positive movement was attributed to favorable trends in both domestic and global markets, along with an influx of foreign funds.
Forex traders closely watched the dollar index, which remained relatively unchanged at the 104 level. The market anticipated an agreement on the US debt ceiling between President Joe Biden and Republican House Speaker Kevin McCarthy.
At the interbank foreign exchange, the rupee opened stronger at 82.57 against the dollar, reaching a high of 82.51 before settling at 82.54. This marked a 6 paise gain compared to the previous close of 82.60 on Friday.
Anand James, Chief Market Strategist at Geojit Financial Services, provided insights into the rupee’s outlook, suggesting a potential rise to 82.25 against the US currency. He emphasized the importance of the 82.70 resistance level and its potential impact on the currency’s direction. Failure to surpass this level could lead to a revisit of 82.45, and a breach of that level might expose 82.2. James highlighted the significance of maintaining the current support level to sustain a sideways trend. However, breaching this level could jeopardize the prospects of an upside breakout beyond 83.25, a possibility that had been building up over the past two weeks.
The dollar index, which measures the strength of the US dollar against a basket of six major currencies, experienced a slight decline of 0.02% to reach 104.18.
In the global oil market, Brent crude futures, the benchmark for oil prices, rose by 0.69% to reach USD 77.48 per barrel.
On the domestic front, the 30-share BSE Sensex demonstrated a positive performance, advancing by 482.62 points or 0.77% to reach 62,984.31. The broader NSE Nifty also showed gains, rising by 134.05 points or 0.72% to reach 18,633.40.
Foreign Institutional Investors (FIIs) contributed to the positive sentiment in the capital market as they were net buyers, purchasing shares worth ₹350.15 crore on Friday, according to exchange data.
Overall, the Indian rupee showcased strength against the US dollar, benefiting from positive market trends and foreign fund inflows. Traders and analysts closely monitored the dollar index and anticipated further developments in the global and domestic markets that could impact the currency’s trajectory.