Rupee Appreciates Amid Weak Dollar and Equity Gains

The Indian rupee appreciated by 1 paisa to trade at 83.72 against the US dollar on Monday, buoyed by a weak dollar in overseas markets and strong domestic equity performance. However, foreign fund outflows due to a hike in capital gains tax rates capped the currency's advance.

The Indian rupee appreciated by 1 paisa to trade at 83.72 against the US dollar early Monday, following a weak dollar trend in the overseas markets.

Opening firmly at 83.70 at the interbank foreign exchange market, the rupee moved tightly between 83.70 and 83.72 in early trade.

At 9.30 am, the rupee was trading at 83.72 against the US dollar. Forex traders attributed the limited upward movement to foreign fund outflows from Indian equities, spurred by the government’s decision to hike the capital gains tax rate.

Last Friday, the rupee had recovered from its all-time low by 5 paise to settle at 83.73, buoyed by the strength in domestic markets and expectations of new foreign inflows.

On the domestic front, the 30-share BSE Sensex hit an all-time high on Monday, rising 355.7 points, or 0.44 per cent, to 81,688.42.

Meanwhile, the dollar index, which measures the greenback's strength against six other currencies, decreased slightly by 0.08 per cent to 104.23.

Brent crude futures, the global oil benchmark, rose by 0.24, or 0.3 per cent, to USD 81.37 per barrel.

India's forex reserves also surged by USD 4 billion, reaching an all-time high of USD 670.857 billion as of the week ending July 19, as per Reserve Bank data released on Friday.

Foreign institutional investors were net buyers in the capital markets on Friday, purchasing shares worth Rs 2,546.38 crore, according to exchange data.