Indian rupee rises 5 paise to 95.57 against US dollar

The Indian rupee opened on a firmer note on Wednesday, gaining 5 paise to trade at 95.57 against the US dollar in early trade. The domestic currency had closed at 95.62 against the American currency on Tuesday.

At the interbank foreign exchange market, the rupee opened at 95.58 before strengthening slightly to 95.57 against the US dollar.

Crude oil prices support rupee

The rupee received support from softer crude oil prices and a recovery in Asian currencies. Brent crude futures declined0.99 per cent to $98.27 per barrel.

Lower crude prices can provide some relief to the rupee as cheaper oil reduces pressure on India's import bill and lowers demand for dollars from oil-importing companies.

However, gains in the domestic currency remained limited by a stronger US dollar and continued foreign portfolio investor (FPI) outflows.

The dollar index, which measures the greenback against a basket of six major currencies, rose 0.10 per cent to 100.70.

Key levels for rupee-dollar pair

Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, identified 96.30 as an upper barrier for the dollar-rupee pair.

According to the report, immediate support for the rupee is seen at 95.50, followed by the 95 level. Traders are also keeping an eye on possible Reserve Bank of India intervention if the dollar-rupee pair approaches the 96.30-96.50 region.

Domestic markets trade higher

Positive sentiment in the domestic equity market also provided some support to the rupee.

The BSE Sensex climbed 283.66 points to 74,812.74 in early trade, while the NSE Nifty advanced 85.55 points to 23,414.55.

However, continued foreign fund selling remains a concern. Foreign institutional investors sold Indian equities worth Rs 3,809.99 crore on a net basis on Tuesday.

Market participants are likely to track crude oil prices, movements in the US dollar, geopolitical developments, global risk sentiment and RBI activity for further direction on the rupee.