The rupee appreciated 4 paise to 82.87 against the US dollar in early trade on Monday, amid a weak American currency against major rivals overseas and an inflow of foreign funds in the domestic capital markets.
A positive sentiment in the equity markets supported the rupee, though the local unit was weighed down by an upward movement in the crude oil prices, forex traders said.
At the interbank foreign exchange, the domestic currency opened at 82.86 and slipped further to trade at 82.87 against the greenback, registering a gain of 4 paise from its previous close.
Gaurang Somaiya, forex and bullion analyst, at Motilal Oswal Financial Services, said, the rupee gained primarily as the dollar fell against major crosses and was also supported by better-than-expected GDP data on the domestic front.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell by 0.01 percent to 103.79.
Somaiya said the dollar index started the month on a weaker note after the US data showed that the manufacturing PMI dropped to 47.8 from 49.1 in January.
“This week, market participants will keep their focus on the US labor market data to gauge a further view on the dollar index. Also, the focus will be on the Fed chairman’s testimony, wherein any hawkish statement is likely to keep the dollar supported at lower levels. We expect $-INR (Spot) to trade sideways and quote in the range of 82.80-83.05,” he said.
Brent crude futures, the global oil benchmark, advanced 0.10 percent to $ 83.63 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 68.88 points or 0.09 percent higher at 73,875.03 points. The broader NSE Nifty climbed 6.065.65 points or 0.09 percent to 22,399.40 points.
India’s forex reserves jumped by $ 2.975 billion to $ 619.072 billion for the week ended February 23, the Reserve Bank said on Friday.
A monthly survey released on Friday showed India’s manufacturing sector growth climbed to a five-month high in February amid a sharper uptick in factory production and sales, supported by domestic and external demand.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose from 56.5 in January to 56.9 in February, pointing to the strongest improvement in the health of the sector since September 2023.
Foreign institutional investors (FIIs) were net buyers in the capital markets on Friday as they bought shares worth Rs 128.94 crore on a net basis, according to exchange data.