Rupee Rebounds Slightly, But Weekly Losses Bite Despite Weak Dollar
The Indian rupee ended with a modest gain on Friday, clawing back 14 paise to settle at 83.14 against the US dollar. However, this uptick failed to mask the currency's worst weekly performance in over two months.
Market sentiment played a key role in Friday's rise. A weaker dollar index, hovering around its lowest level in four months, provided crucial support for the rupee. Global expectations of potential interest rate cuts in the United States further weighed on the greenback.
Despite this tailwind, the rupee witnessed a 0.16% decline for the week, its first such dip since early October. Analysts attributed this to persistent dollar demand from oil importers and foreign fund outflows from the Indian equity market.
"The rupee found temporary relief from a weak dollar," said Jateen Trivedi of LKP Securities. "However, the overall trend remains sideways, confined within a tight range of 82.90-83.40."
Brent crude oil, a major input for India, saw a modest climb on Friday, adding another layer of pressure on the currency. Oil prices have consistently trended higher in recent months, raising concerns about India's import bill and impacting domestic inflation.
On the domestic front, positive cues from global markets pushed the Indian stock market higher. Both the Sensex and Nifty 50 indices closed with gains, but foreign institutional investors remained net sellers, continuing their recent trend of capital outflow.
