The Indian rupee kicked off the trading day positively, strengthening by 11 paise against the US dollar. This upward trend in the local currency occurred despite the relatively hawkish stance expressed by Federal Reserve Chair, Jerome Powell during his testimony to US lawmakers. The rupee commenced trading at 81.93 against the dollar, surpassing the previous day’s closing rate of 82.04.
The US dollar struggled to maintain its value, hovering close to a one-month low against a basket of currencies. Powell’s remarks on Capitol Hill regarding potential future rate increases, stating that they are “a pretty good guess” if the economy continues on its current trajectory, contributed to the dollar’s decline. In the previous session, the greenback depreciated by nearly 0.5% against six major currencies, with the US dollar index standing at 102.05 during early Asian trade. This level is close to its recent five-week low of 102.00.
Several other currencies gained strength as the dollar weakened.
The euro climbed to a more than one-month high of $1.09925, while the British pound experienced a modest 0.02% increase, reaching $1.2770. Other Asian currencies saw gains ranging from 0.1% to 0.3%. On the previous day, the rupee closed higher at 82.04 against the US dollar, marking an increase of 8 paise.
Meanwhile, crude oil prices declined as market participants weighed an unexpected draw in US crude oil stocks against the potential for weaker demand following Powell’s hint at further interest rate hikes. Brent futures dropped by 0.36% to $76.84 per barrel, and US WTI crude futures fell by 0.33% to $72.29. On the domestic front, Indian equity indices Sensex and Nifty started the day in negative territory, influenced by mixed cues from Asian markets.
In terms of investments, FIIs purchased Indian equities worth ₹4,013.10 crores on Wednesday, while DIIs bought shares worth ₹550.36 crores, as per provisional data available on the exchanges.
Despite Powell’s testimony and the impact it had on the dollar, the Indian rupee opened higher against the US currency, indicating a temporary weakness in the greenback. The movement of the rupee and other currencies will continue to be influenced by various global and domestic factors in the coming trading sessions.