NEW DELHI: Rupee ended Friday’s trading session strong, up 33-paise gain against the US dollar, closing at 94.93. The momentum came as the greenback remained soft and upbeat Dalal Street lent support to the currency. However, elevated crude oil prices and weakness in broader markets restricted its gains.Rupee began the session at 95.21 at the interbank foreign exchange market. It strengthened during the day, moving between an intraday high of 94.94 and a low of 95.28 before settling at 94.93. This marked a recovery from Thursday’s closing level of 95.26, when the rupee had gained just 2 paise after trading in a narrow range.Forex traders attributed the support for both the rupee and the bond market to softer crude oil prices and intervention by the central bank.The movement in global indicators also offered some relief. The dollar index, which tracks the US dollar against a basket of six currencies, slipped 0.37 per cent to 101.66. Brent crude futures, meanwhile, declined 1.03 per cent to $114.13 per barrel.On the domestic front, benchmark indices ended higher, with Sensex advancing 308.49 points to 74,459.53 and NSE Nifty50 rising 116.35 points to 23,053.10.Despite Friday’s recovery, analysts expect geopolitical developments and crude oil movements to remain important factors for Trupee’s trajectory.“We expect the rupee to trade with a slight negative bias on geopolitical tensions in the Middle East after the US warned its allies to prepare for a fresh strike on Iran after US elections,” said Anuj Choudhary, research analyst, Mirae Asset Sharekhan.He added that a further rise in crude oil prices could weigh down the currency, while favourable domestic market conditions, a softer US dollar and US Treasury yields could offer support. RBI intervention may also help limit rupee’s losses.“However, positive domestic markets, a soft US dollar and US Treasury yields may support the rupee at lower levels. Any intervention by the RBI may also support the rupee at lower levels. USD-INR spot price is expected to trade in a range of 94.80 to 95.35,” he said.Meanwhile, foreign institutional investors remained net sellers in the equity market, selling shares worth Rs 943.60 crore on Thursday, according to exchange data.The currency’s movement also comes amid a debate over the RBI’s intervention in the foreign exchange market. The IMF on Thursday said exchange rate flexibility should remain the preferred approach for India to absorb the impact of energy shocks. The remarks came amid reports of significant central bank intervention to support rupee.IMF communications director Julie Kozack said the exchange rate should be allowed to reflect the impact of external shocks to help the country’s economy adjust.“Our view is that the rupee should be the first line of defence in the face of these shocks. So, allowing the exchange rate to move freely to reflect the impact of these shocks is important to help the Indian economy adjust to the shocks,” she said.
