Rupee strengthens at 84.25 amid falling oil prices and equity inflows

Synopsis

The currency had strengthened to 84.13 per dollar during the day, but dollar demand from importers weakened the currency, which had closed at 84.58 per dollar the previous day, LSEG data showed.

Mumbai: The Indian rupee closed stronger Monday at 84.25 per dollar, buoyed by modest inflows into Indian equities, falling crude oil prices and strengthening of the Chinese yuan.

The rupee gained 33 paisa on Monday from its previous closing.

The currency had strengthened to 84.13 per dollar during the day, but dollar demand from importers weakened the currency, which had closed at 84.58 per dollar the previous day, LSEG data showed.

The dollar index was down 0.2% at 99.6, while the yuan strengthened to a six-month peak at 7.18 amid optimism about trade talks between China and US.

Oil prices fell to a four-year low in April below $60 per barrel after OPEC announced a bigger-than-expected production boost for May. US President Donald Trump's tariffs have raised concerns of a global economic weakness, Reuters said, explaining the retreat in energy prices across the globe.

A fall in oil prices is good for the Indian economy, as the country is a major importer of the commodity.

"In the last 15 minutes of the day, the rupee strengthened from 84.45/$1 to 84.25/$1 amid continuous dollar selling. The central bank, too, was likely present at higher levels and absorbed dollars," said Anil Bhansali, head of treasury at Finrex Treasury Advisors.

State Bank of India expects the rupee to stabilise at 85-87 by December, while IDFC First Bank expects the currency to be at 86-86.5, the respective lenders said in client advisories Monday. Investors will now be looking at remarks by the Federal Reserve chair Jerome Powell during the Federal Open Market Committee (FOMC) meeting scheduled on Wednesday. The Fed is largely expected to keep rates unchanged.

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