Rupee Gains 3 Paise to 89.95 on Strong Industrial Data, Weak Dollar
- The Indian rupee rose 3 paise to 89.95 against the US dollar, supported by a weaker dollar and strong industrial output data.
- Gains were limited due to foreign fund outflows, higher crude prices, and weak equity market openings.
- The Index of Industrial Production (IIP) hit a 25-month high of 6.7% in November, boosting early rupee recovery.
The Indian rupee on Tuesday rose by 3 paise to 89.95 against the US dollar in early trade, supported by a weaker greenback and stronger industrial output data. However, gains were limited due to foreign fund outflows, slightly higher crude oil prices, and a weak start in domestic equities, forex traders said.
At the interbank foreign exchange, the rupee opened at 89.98 and strengthened to 89.95, recovering from Monday’s 8-paise depreciation when it had settled at 89.98.
“The RBI on Monday protected the top end of the curve while FPIs who sold equities also bought dollars, keeping bids active for the full day and taking it almost to 90 levels”, said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, as reported by PTI.
Bhansali pointed to the latest Index of Industrial Production (IIP) data as a supporting factor. “The IIP reached a 25-month high of 6.7% in November, against expectations of 2.5% and last month’s growth of 0.5%. Annual growth stands at 3.3% compared to 2.7% in the previous month”, he added.
Indian equity benchmarks opened lower on weak global cues. Nifty50 fell below 25,950 while the BSE Sensex dropped over 120 points. At 9:19 AM, Nifty50 was trading at 25,902.85, down 39 points or 0.15%, and BSE Sensex was at 84,567.40, down 128 points or 0.5%.
Meanwhile, foreign institutional investors (FIIs) sold equities worth Rs 2,759.89 crore on Monday, according to exchange data. The dollar index, which tracks the greenback against a basket of six major currencies, was marginally lower by 0.03% at 98.01, providing some relief to the rupee.
Traders said that while the rupee showed early resilience, sustained gains would depend on continued foreign fund inflows and global market trends.
