The Indian rupee strengthened 7 paise to 93.70 against the US dollar in early trade on Wednesday, supported by foreign investment inflows, softer crude oil prices and improving geopolitical sentiment.
In the interbank foreign exchange market, the rupee opened at around 93.71 before touching 93.70. On Monday, it had gained 21 paise to close at 93.77. Domestic equity, currency and debt markets remained closed on Tuesday for Diwali Balipratipada.
Forex traders said foreign investors were gradually returning to Indian markets after months of outflows. Foreign institutional investors (FIIs) purchased equities worth Rs 7,212.22 crore on Monday and invested Rs 53,739 crore during the first nine days of November.
This followed outflows of Rs 34,843 crore in October and Rs 35,861 crore in September.
CR Forex Advisors MD Amit Pabari said continued foreign capital inflows, softer crude prices and improved geopolitical sentiment could push the dollar-rupee exchange rate towards 93.50, with 93.00 emerging as another key level.
The dollar index stood at 102.26, while Brent crude futures traded 1.01 per cent higher at $92.41 per barrel.
Kotak NEO’s Anindya Banerjee said cheaper oil could reduce India’s import bill, although higher US yields and a stronger dollar could exert pressure on the rupee.
Investors will also watch India’s inflation data, scheduled for release on Thursday, as an important domestic policy indicator.
