Rupee rises 12 paise to close at 86.81 against US dollar

The rupee extended its recovery and settled 12 paise higher at 86.81 (provisional) against the US dollar on Friday amid easing American currency.

However, higher crude oil prices and incessant selling of domestic equities by foreign institutional investors capped a sharp gain in the local unit, forex traders said.

Also, they said, the aggressive dollar chase was halted after the US government announced the implementation of reciprocal tariffs on April 1, giving its trading partners some relief.

At the interbank foreign exchange, the rupee opened at 86.86 and touched the high of 86.79 against the greenback during intraday. It also touched the low of 86.90 before ending the session at 86.81 (provisional) against the dollar, logging a gain of 12 paise from its previous close.

On Thursday, the rupee settled almost flat with a marginal gain of 2 paise at 86.93 against the US dollar. The unit had closed 16 paise lower on Wednesday, a day after surging 66 paise, witnessing the highest single-day rise in nearly two years.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee gained on the weak US dollar index.

He further said that the US dollar declined as President Donald Trump delayed the implementation of reciprocal tariffs to April 1 which calmed market nerves.

"Persistent outflows by FIIs may pressurise the rupee further. However, any further intervention by the RBI may support the rupee at lower levels. Traders may take cues from retail sales and industrial production data from the US, Choudhary said, adding the "USD-INR spot price is expected to trade in a range of 86.60 to 87.10".

The domestic unit has been facing extreme volatility for the past few months due to several global macroeconomic uncertainties.

Finance Minister Nirmala Sitharaman on Thursday said the rupee along with other Asian currencies has depreciated against the US dollar on account of uncertainty pervading the global macroeconomy.

"Quarter four of 2024, certainly witnessed extensive currency-related volatility across major countries, not just India. Indian rupee, like other Asian currencies, depreciated against the US dollar on account of uncertainty pervading the global macro economy," Sitharaman said in her reply to a discussion on the Union Budget 2025-26 in Rajya Sabha.

She said that the US Dollar Index rose to 6.5 per cent during October 21, 2024 to January 27, 2025.

On Friday, the US dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.39 per cent lower at 106.79.
Brent crude, the global oil benchmark, rose 0.35 per cent to USD 75.28 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex declined 199.76 points, or 0.26 per cent, to settle at 75,939.21, while the Nifty fell 102.15 points, or 0.44 per cent, to 22,929.25 points.

Foreign institutional investors (FIIs) offloaded equities worth Rs 2,789.91 crore on net basis on Thursday, according to exchange data.