The Indian Rupee strengthens against the US Dollar for five straight sessions, marking its longest winning streak since September. Despite continued foreign portfolio selling, the Rupee gained 1.08 percent this month. India’s trade deficit decreased significantly, while global crude prices rose due to Middle Eastern tensions. Indian stock indices have performed well amid positive sentiments in the market.
The Indian Rupee has recorded a notable performance, closing stronger against the US Dollar for five consecutive sessions. As of Tuesday, it ended at 86.57, showing a gain of 23 paise from Monday’s rate of 86.80, according to Bloomberg data. This marks the currency’s longest winning streak since September of the previous year, with the Rupee having gained 1.08 percent in March following five months of decline.
Despite this uptick, foreign portfolio investors have been on a selling spree, liquidating Rs 1.43 trillion this year, with Rs 4,488 crore sold on Monday alone, as per NSE data. Additionally, the Dollar index, which measures the US Dollar against a basket of currencies, has seen a slight decrease of 0.04 percent, currently standing at 103.32, reflecting a decline of over 3.6 percent this month—the most significant drop since November 2022.
India’s merchandise trade deficit has also seen a significant decline, falling to a three-and-a-half-year low of $14.05 billion in February. This contraction is attributed to decreased exports and imports, stemming from dampened global petroleum prices and increased economic uncertainty.
The rise in crude oil prices continues to be a concern, with Brent and WTI seeing increases of 1.45 percent and 1.55 percent respectively, due to escalating tensions in the Middle East. As of March 16, the banking sector remains under a liquidity strain, with a deficit estimated at Rs 2 trillion, compelling action from the Reserve Bank of India to manage liquidity and bolster foreign exchange reserves.
On a positive note, Indian benchmark indices, including the Nifty and Sensex, witnessed growth of over 1 percent on Tuesday, influenced by favorable global sentiments and strong domestic institutional investments.
In summary, the Indian Rupee has achieved its longest winning streak in months amid a weaker Dollar, even as foreign portfolio investors exit the market due to rising crude prices and liquidity concerns. Additionally, the trade deficit has narrowed significantly, and Indian indices have responded positively amidst favorable market sentiments. The situation illustrates the ongoing dynamics in the currency market, influenced by global factors and local economic conditions.
Original Source: www.business-standard.com
