Rupee rises 4 paise to 83.48 against U.S. dollar in early trade

Rupee strengthens against the dollar amid positive equities trend, with potential for appreciation and FDI inflows in India.

The rupee was trading in a narrow range against the American currency in early trade on May 7 and appreciated 4 paise to 83.48 against the U.S. dollar amid a positive trend in domestic equities.

Forex traders said the strength of the American currency in the overseas market, elevated crude oil prices and foreign fund outflows weighed on the local unit and restricted the up move.

At the interbank foreign exchange market, the local unit opened at 83.48 against the greenback, registering a rise of 4 paise from its previous close.

On May 6, the rupee settled 7 paise lower at 83.52 against the U.S. dollar.

“India’s enduringly strong economic fundamentals, coupled with its substantial foreign exchange reserves acting as a safety net, equip the Reserve Bank of India to effectively mitigate any downward pressure on the rupee,” CR Forex Advisors MD Amit Pabari said.

Moreover, substantial foreign direct investment (FDI) inflows are anticipated. The Adani Group is eyeing a $600 million raise via offshore loans, while Belstar Microfinance plans to raise $150 million through an IPO.

“Considering these factors, the downside of the rupee is capped at 83.60. While it is expected to appreciate around 83 to 83.20 in the near-term, with medium-term appreciation ranging between 82.80 to 82.50 levels,” Mr. Pabari said.