The Indian rupee opened Friday on a stronger footing, rising 14 paise against the US dollar as upbeat sentiment in domestic equity markets provided support, according to forex traders. At the interbank foreign exchange market, the rupee opened at 96.35 and strengthened to 96.28, recovering from its previous close of 96.42. However, gains remained capped due to sustained foreign institutional investor (FII) outflows and firm crude oil prices amid escalating tensions in the Middle East.
Rupee Performance
The domestic currency had ended lower for the fourth consecutive session on Thursday, declining 17 paise to settle at 96.42. Friday's 14-paise gain partially reversed that loss, though the rupee remains under pressure from multiple headwinds. The previous close of 96.42 marked a sustained depreciation trend.
Geopolitical Context
Market participants continued to monitor developments in the Middle East after the US expanded its airstrike campaign against Iran early on Friday, increasingly targeting bridges as part of President Donald Trump's threats to strike infrastructure. Iran, in response, launched fresh missile attacks against US-allied nations in the region and warned that its attacks would intensify, according to forex traders.
"Continued geopolitical uncertainties in West Asia sustained demand for safe-haven assets and kept investors cautious towards emerging-market currencies, including the rupee. Rupee is expected to remain in the range of 96.00-96.50 for the day with a downside bias as dollar index remains up and oil prices remain near USD 85 per barrel," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
Market Snapshot
| Metric | Value | Change |
|---|---|---|
| Rupee (vs USD) | 96.28 | +14 paise |
| Previous close | 96.42 | – |
| Dollar Index (DXY) | 100.78 | +0.02% |
| Brent crude (per barrel) | $84.83 | +0.39% |
| Sensex | 77,981.76 | +~800 points |
| Nifty50 | ~24,200 | – |
| FII net outflow (Rs crore) | 4,205.56 | Thursday data |
Equity Market and FII Flows
Dalal Street traded higher in early deals, with the Sensex advancing almost 800 points to 77,981.76 and the Nifty50 nearing 24,200 levels. Despite the equity rally, foreign institutional investors remained net sellers, offloading equities worth Rs 4,205.56 crore on Thursday, according to exchange data. This sustained outflow added to the rupee's headwinds.
Outlook
Forex traders expect the rupee to trade in a narrow band of 96.00-96.50 with a downside bias, as the dollar index remains elevated and crude oil prices stay near $85 per barrel. For treasury professionals and importers, the 14-paise gain offers limited relief against the backdrop of continued geopolitical risks and capital outflows. The interplay between equity market optimism and external pressures will likely keep the rupee volatile in the near term.
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