After a weakening U.S. dollar in the foreign exchange market, the rupee strengthened by 5 paise to end the day Monday at 81.97 (provisional). The local unit gained 5 paise from its previous finish to close at the interbank foreign exchange market, closing at 81.97 (provisional) versus the dollar after having opened at 81.90 against the U.S. currency.
The dollar index, which measures how strong the dollar is relative to a basket of six different currencies, decreased 0.02 percent to 102.06. Brent crude futures, the international standard for crude oil, increased 0.05% to USD 85.16 a barrel.
A weak dollar in early Asian trade and a below-normal monsoon forecast by Skymet hurt the rupee, but solid domestic stocks limited the damage, according to Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas.
Even though non-farm payrolls came in slightly below expectations, they still show a tight labour market, which helped the dollar. The unemployment rate decreased as well, going from 3.6% to 3.5%. Choudhary stated that this increased the chances that the Fed would raise interest rates by 25 basis points at its FOMC meeting in May.
Because of the strong US dollar and rising crude oil prices, “we expect Indian rupee to trade with a tiny negative bias,” Choudhary added. Yet, the rupee may be supported at lower levels by healthy global markets and recent FII inflows.
