The domestic currency advanced amid favorable external and internal factors, having touched an intraday high of 94.50 after opening at 94.61. Equities rallied alongside easing global energy costs, with Brent crude futures declining 0.73 per cent to settle at USD 102.84 per barrel. Sustained purchasing by foreign institutional investors for three consecutive sessions also provided substantial underlying liquidity to the financial system.
Key points
Anticipation of measured trade policies following the US midterm elections is expected to…: Anticipation of measured trade policies following the US midterm elections is expected to strengthen emerging market foreign investments.
Easing crude oil prices and a weaker dollar index helped alleviate macroeconomic pressure…: Easing crude oil prices and a weaker dollar index helped alleviate macroeconomic pressures on local assets.
Sustained foreign institutional investor buying indicates robust investor confidence in I…: Sustained foreign institutional investor buying indicates robust investor confidence in Indian equity and currency markets.
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Positive domestic equities market also favoured the local currency even as the outcome of the US midterm elections improved global sentiment, forex traders said.
In the interbank foreign exchange market, the rupee opened at 94.61 and hit the high of 94.50 and the low of 94.87 against the greenback. The unit finally settled at 94.58 (provisional), up 17 paise from its previous closing level.
On Tuesday, the domestic currency rose 9 paise to close at 94.75 against the US dollar.
"The US midterm outcome improved global sentiment, raising expectations of a more measured approach to trade and tariff policies and potentially supporting FII flows into emerging markets," said Vinod Nair, Head of Research, Geojit Investments Limited.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 101.18, lower by 0.53 per cent. US Treasury yields also declined amid expectations of a favourable outcome for the Democratic Party in the midterm elections.
Brent crude, the global oil benchmark, declined 0.73 per cent to USD 102.84 per barrel in futures trade even as geopolitical…
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