Rupee rises 6 paise to 85.49 against US dollar in early trade
CHENNAI: The Indian rupee opened marginally stronger on Monday, rising 6 paise to 85.49 against the US dollar in early trade, buoyed by positive domestic macroeconomic data and improved investor sentiment.
The local currency is drawing support from India’s robust Q4 GDP growth of 7.4%, which surpassed market expectations and highlighted strength in the construction and manufacturing sectors. The upbeat data has reinforced optimism around India’s economic outlook, aiding currency sentiment.
Key Drivers:
Positive GDP Surprise: Better-than-expected growth has improved foreign investor confidence, potentially encouraging capital inflows.
Stable Crude Prices: Global crude oil prices remained relatively steady, easing concerns over India’s import bill and trade deficit pressures.
Export Demand and Corporate Flows: Month-beginning exporter demand and routine corporate flows are likely supporting the rupee in early trade.
However, gains may be capped by persistent Strength in the US Dollar Index (DXY): The dollar remains firm amid cautious global sentiment ahead of key US macro data this week, including the non-farm payroll report.
Geopolitical Uncertainty and Global Risk Aversion: Investors continue to monitor geopolitical developments and global interest rate expectations, which could impact emerging market currencies.
Outlook:
Markets will closely watch the RBI's monetary policy decision due later this week, which could offer further cues for the rupee. Analysts expect the central bank to maintain its current policy stance but focus on liquidity management and inflation control, both of which could influence currency movements.