Lower crude prices boost rupee despite FII selling

The rupee appreciated 31 paise against the US dollar in early trade on Thursday, buoyed by a sharp decline in global crude oil prices, a weaker US dollar and positive sentiment in domestic equity markets.

The local currency opened at 94.30 against the dollar in the interbank foreign exchange market before strengthening to 94.24, extending gains after closing at 94.55 on Wednesday.

Forex traders said the fall in crude oil prices, which have slipped below levels seen before the recent West Asia conflict, improved sentiment towards the rupee by easing concerns over India's oil import bill. However, continued selling by foreign institutional investors (FIIs) prevented a stronger rally.

Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, said the rupee benefited from the sharp fall in global oil prices, with Brent crude declining more than 10 per cent this week and over 21 per cent during the month.

She added that the rupee's gains were limited by the strength of the US dollar, which remained close to a one-year high amid expectations that the US Federal Reserve could maintain a tighter monetary policy.

The dollar index, which measures the greenback against a basket of six major currencies, was trading 0.10 per cent lower at 101.50.

Brent crude futures fell 1.72 per cent to USD 72.47 a barrel, extending their recent decline.

Indian equity markets also opened in positive territory. The Sensex rose 440.23 points to 77,435.76 in early trade, while the Nifty gained 137.80 points to 24,147.60.

Exchange data showed that foreign institutional investors remained net sellers on Wednesday, offloading equities worth Rs 1,843.40 crore.

With PTI inputs