Rupee strengthens by 33 paise versus US Dollar on positive macroeconomic data, foreign fund inflows

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The rupee gained 33 pounds to close at 82.42 (tentative) against the US dollar on Thursday, as positive macroeconomic data boosted investor sentiment.

In the foreign exchange market between banks, the local unit opened at 82.54 against the US dollar and settled at 82.42 (temporary), an increase of 33 pounds from its previous closing amid continued inflows of foreign funds.

During the day, the local unit witnessed the highest level of the day at 82.36 and the lowest level at 82.54.

On Wednesday, the rupee closed at 82.75 against the greenback.

The dollar index, which measures the greenback’s strength against a basket of six currencies, fell 0.20 percent to 104.12.

Global benchmark Brent crude futures rose 0.17% to $72.72 a barrel.

“The Indian rupee strengthened amid excellent economic data and foreign money inflows. It posted its best one-day gain in almost two months after dollar inflows and lower commodity prices,” said Dilip Parmar, research analyst at HDFC Securities.

Foreign institutions bought $4.5 billion in local stocks in May, the most since November.

Although spot USDINR fell on Thursday, technical data points to a continuation of the bullish trend, Parmar said, adding that looking ahead, traders will wait for Friday’s US payroll data ahead of the Fed’s June meeting.

In terms of the local stock market, the BSE Sensex index, which includes 30 shares, fell by 193.70 points, or 0.31 percent, to close at 62,428.54 points, and the broader NSE Nifty index fell 46.65 points, or 0.25 percent, to 18,487.75 points.

Foreign institutional investors (FIIs) were net buyers in the capital market on Wednesday buying shares worth ₹3,405.90 crore, according to exchange data.

On the domestic macro front, manufacturing activities in India advanced further and touched a 31-month high in May supported by a stronger increase in new orders and favorable market conditions.

Meanwhile, the center’s fiscal deficit narrowed to 6.4 percent of GDP in 2022-23 from 6.71 percent in FY22.

The Comptroller General of Accounts (CGA) revealed on the revenue and expenditure data of the Union Government for the period 2022-23, that the fiscal deficit in absolute terms was ₹17,33,131 crore (provisional), marginally lower than the amount projected in the revised estimates (re-)budget.

Moreover, according to official figures released on Wednesday, the Indian economy grew by 6.1 percent in the March quarter of 2022 to March 23, pushing the annual growth rate to 7.2 percent due to the better performance of the agriculture, manufacturing, mining and construction sectors.