The rupee strengthened by 9 paise to 87.28 versus the US dollar in early trading on Monday as the American currency index pulled back from high levels and local equity markets showed signs of recovery following solid macroeconomic data.
Forex traders anticipate that the exit of foreign capital will stop, as the most recent government data provided on Friday indicated that the economy expanded by 6.2 percent in the October-December period, recovering sequentially from seven-quarter lows.
Nonetheless, the volatility caused by the US tariff persisted, resulting in a rise in crude oil prices and limiting a significant increase in the domestic currency, they noted.
In the interbank foreign exchange market, the rupee started at 87.36 and strengthened to 87.28 versus the US dollar, marking an increase of 9 paise from its last closing value.
On Friday, the rupee dropped by 19 paise to close at 87.37 versus the US dollar.
In the meantime, the dollar index, which measures the dollar’s strength relative to a group of six currencies, was trading 0.34 percent lower at 107.19.
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Brent crude, the worldwide oil standard, increased by 0.59 percent to USD 73.24 per barrel in futures trading.
In the local stock market, the 30-share BSE Sensex was up 167.25 points or 0.23 percent at 73,365.35 during morning trading, while Nifty increased by 69.65 points or 0.31 percent to 22,194.35.
On Friday, the Reserve Bank executed a US dollar-rupee swap amounting to USD 10 billion to provide long-term liquidity in the system, with strong interest shown during the auction. The auction settlement is scheduled for March 4 and March 6.
