Rupee rises 7 paise to 84.22 against US dollar

NEW DELHI New Delhi: The rupee rose 7 paise to 84.22 against the US dollar in morning trade on Tuesday, tracking a sharp surge in domestic equities amid improving risk appetite of investors.Forex traders said rebalancing of the MSCI equity index significantly boosted sentiment for Indian equity markets, as foreign institutional investors broke a 40-session net sell-off streak by buying Rs 9,947 crore on Monday, providing strong support to the rupee.

Besides, the victory of the incumbent government in Maharashtra further boosted investor confidence in economic stability, which led to a rally in equity markets. The rupee opened at 84.27 at the interbank foreign exchange market and moved in a narrow range to touch an early high of 84.22 against the dollar, registering a gain of 7 paise over its previous close.

Amit Pabari, MD, CR Forex Advisors, said, “While Donald Trump’s aggressive trade policies loom large, the rupee outlook remains cautiously optimistic. The Reserve Bank of India’s forecast of GDP growth at 7.6 per cent in the third quarter has instilled fresh confidence in India’s economic trajectory. Additionally, increased capital inflows are likely to provide strong support.” Pabari further added that the RBI’s cautious stance will be key in managing volatility, with interventions likely at key levels to maintain stability. He added, “Given these factors, the USDINR pair is facing resistance around 84.50 levels, expected to trade within the range of 83.80 to 84.50, with a downward bias.”