Rupee inches upward on dollar sales by exporters, foreign banks

The Rupee showed marginal gains on Monday, setting a positive tone for the new year, supported by dollar sales from exporters and foreign banks. 

As of 10:15 am, the Rupee stood at 83.1725 against the US dollar, a slight improvement from its previous session close of 83.2075.

In early trading, the Rupee fluctuated between 83.2350 and 83.1550, with most global markets closed for the New Year's holiday. 

The Dollar Index, ending a two-year winning streak by declining about 2 per cent in 2023, faced pressure due to growing expectations of a US rate cut.

While the Rupee experienced its sixth consecutive year of decline in 2023, it marked the smallest drop in at least 20 years, attributed to persistent intervention by the Reserve Bank of India (RBI) that led to historically low volatility.

The early gains of the Rupee on Monday were attributed to dollar sales by foreign banks and exporters, according to a foreign exchange trader at a state-run bank. 

Despite strong foreign inflows supporting the Rupee in the near term, observers are keen to see the Reserve Bank of India's stance on potential appreciation beyond the 83 handle.

Foreign investors displayed confidence in Indian markets, buying equities and shares worth $28.7 billion in the past year, as per NSDL data. Amit Pabari, Managing Director at the fx advisory firm CR Forex, noted that while the Rupee's fundamentals are solid, its performance above the 83 level will be closely monitored.

Investors are also awaiting US economic data scheduled for later in the week, including the highly anticipated US non-farm payrolls and unemployment data expected on Friday. 

A Reuters poll suggests an anticipated increase in the US unemployment rate to 3.8 per cent in December from 3.7 per cent in November.

(With Reuters Inputs)