Rupee Strengthens to 95.17 Against Dollar Following Fed Decision

In early trading on Thursday, the Indian rupee appreciated by 11 paise, reaching 95.17 against the US dollar. This rise came after the dollar weakened following the US Federal Reserve's decision to keep interest rates unchanged. The rupee opened at 95.20 in the interbank foreign exchange market but quickly moved higher, having settled at 95.28 in the previous session.

The Federal Reserve maintained its interest rates within the range of 3.75% to 4.00%, a decision that was widely anticipated. Despite this expected outcome, forex traders noted a slight negative reaction in the dollar's value. The rupee, however, continues to face challenges due to high crude oil prices and strong US yields, although support from India's foreign exchange reserves, which stand at approximately $721 billion, and recent improvements in portfolio flows are helping stabilize the currency.

Anindya Banerjee, head of commodity and currency research at Kotak NEO, indicated that the market is likely to see a gradual upward trend in the USD-INR exchange rate rather than erratic movements. Traders are now focused on upcoming economic data that could influence market sentiment following the Fed's decision.

Inflation data will be particularly scrutinized, as stronger figures may heighten expectations for a rate hike in December, while weaker data could provide relief to bullion and emerging market currencies. Additionally, the dollar index, which measures the US dollar against a basket of six other currencies, fell by 0.04% to 102.15. Brent crude oil prices also saw a decline, dropping 1.03% to $114.13 per barrel.

On the domestic front, Indian equities experienced a positive start on Thursday, with the BSE Sensex rising over 550 points to reach 73,409.06, and the NSE Nifty50 surpassing 22,730 points. Furthermore, foreign institutional investors were net buyers of Indian equities, purchasing shares worth Rs 871.83 crore on Wednesday, according to exchange data.