Rupee gains 8 paise to 81.74 against US dollar in early trade

The rupee gained 8 paise to 81.74 against US dollar in early trade on Tuesday, May 2, 2023 tracking a weak American currency and a firm trend in domestic equities. Forex and equity markets were closed on Monday on account of 'Maharashtra Day'. On Friday, the rupee closed at 81.82 against the US currency.

Forex traders said significant foreign fund inflows and crude oil prices below $80 a barrel also supported the local unit.

At the interbank foreign exchange, the domestic unit opened at 81.75 against the dollar and then climbed to 81.72, registering a rise of 10 paise over its previous close.

The dollar index — which gauges the dollar against six currencies other than the rupee — was last seen trading 0.12 per cent lower at 102.03. The index compares the dollar to the yen, the pound, the Canadian dollar, the Swedish krona, the Swiss franc, and the euro.

Brent crude futures, the global oil benchmark, advanced 0.15 per cent to $79.43 per barrel.

Forex traders said investors are waiting for cues from the paramount US FOMC meeting beginning later in the day. Market now awaits the Federal Open Market Committee (FOMC) outcome on May 3.

In the domestic equity market, the 30-share BSE Sensex advanced 336.5 points or 0.55 per cent to 61,448.94. The broader NSE Nifty rose 96.50 points or 0.53 per cent to 18,161.50.

Foreign Institutional Investors (FIIs) were net buyers in the capital market on Friday as they purchased shares worth Rs 3,304.32 crore, according to exchange data.

"India outperformed the rest of Asia and the developed markets in April with a smart rally mainly assisted by sudden change of strategy by the FIIs who have turned big buyers in the market in the last two trading days. The important trigger for this change of FII strategy is the appreciation in the rupee. The rupee which had depreciated to 82.94 to the dollar in late February is now around 81.80 and is expected to appreciate further on India’s  improving current account deficit. Also, the good corporate results, particularly from the banking space and record GST collections at Rs 1.87 lakh crores are aiding bullish sentiments. The market is resilient and the undercurrent is bullish," commented Dr V K Vijayakumar, chief investment strategist at Geojit Financial Services.

On the domestic macroeconomic front, record GST collections and a four-month high manufacturing PMI are aiding bullish sentiments.

The GST collection in April rose by 12 per cent annually to over Rs 1.87 lakh crore, touching an all-time monthly high, the finance ministry data released on Monday said.

With PTI inputs