Rupee Ends Flat Against US Dollar: Oil Prices, Budget Impact

Mumbai, Feb 2 (PTI) The rupee surrendered early gains to settle flat at 82.98 against the US dollar on Friday, as a rise in crude oil prices negated the positive sentiment on strong domestic equities and a weak greenback overseas.

Overall, the interim Budget 2024-25, especially the focus on fiscal prudence, has left a positive impact on the domestic currency, forex traders said.

At the interbank foreign exchange market, the local unit opened at 82.91 against the greenback. The unit hit an intraday high of 82.82 and a low of 82.98.

The local unit finally settled flat at 82.98 against the dollar.

"The Indian rupee....was supported by upbeat risk appetite following the presentation of India's federal budget and a fall in the US bond yields and the Dollar Index in the previous session.

"However, gains were capped as dollar demand from state-owned banks likely on behalf of the Reserve Bank of India and importers," Sriram Iyer, Senior Research Analyst at Reliance Securities, said.

Finance Minister Nirmala Sitharaman on Thursday hiked capital expenditure by 11 per cent for the next fiscal to sustain a world-beating economic growth rate while trimming the deficit in a reform-oriented interim budget.

Continuing on the fiscally prudent path, the Modi government in the interim Budget refrained from announcing populist measures, which will help it trim the fiscal deficit to 5.1 per cent of the GDP next fiscal and 4.5 per cent in FY26.

"We expect the rupee to trade with a slight positive bias on a weak tone in the US dollar and a rise in risk appetite in global markets. Weakness in crude oil prices may also support the rupee. However, profit booking by FIIs may lead to outflows, which may cap a sharp upside in the rupee.

"Any recovery in crude oil prices may also weigh on the rupee at higher levels. Traders may take cues from US non-farm payroll reports and factory order data. The US is likely to add jobs but at a slower pace. USD/INR spot price is expected to trade in a range of Rs 82.50 to Rs 83.20," said Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.11 per cent lower at 102.93.

"The US dollar declined on hawkish Bank of England monetary policy. Bank of England (BoE) kept interest rates unchanged at 5.25 per cent," Choudhary added.

Brent crude futures, the global oil benchmark, rose 0.60 per cent to USD 79.17 per barrel.

On the domestic equity market front, Sensex advanced 440.33 points, or 0.61 per cent, to 72,085.63 points. The Nifty rose 156.35 points, or 0.72 per cent, to 21,853.80 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday as they purchased shares worth Rs 70.69 crore, according to exchange data.