The Indian rupee appreciated by 19 paise to 85.29 per US dollar in early trade on Friday, May 30, recovering from the previous session’s decline. This surge was largely attributed to lower global crude oil prices and consistent foreign institutional investor (FII) inflows into Indian equities.

At the interbank foreign exchange, the domestic currency opened at 85.35 and strengthened further to 85.29, marking a significant recovery from Thursday’s closing of 85.48, when it had slipped 10 paise.

Crude Oil Price Softens, Supporting Rupee

Brent crude, the international benchmark for oil prices, dropped by 0.48% to $63.84 per barrel in futures trading. This decline has a direct positive impact on India’s trade deficit, as the country is a net importer of oil. Lower oil prices reduce the import bill, thereby reducing demand for dollars and supporting the rupee’s strength.

Foreign Fund Inflows Add Further Strength

The FIIs purchased ₹884.03 crore worth of Indian equities on a net basis on Thursday, May 29, according to data from Indian stock exchanges. This inflow of capital into Indian markets helped build up forex reserves, which further strengthens the rupee and improves India’s macroeconomic position.

Foreign investment is a critical driver for the rupee’s movement, especially amid global uncertainty. As confidence in Indian economic fundamentals continues, foreign investors are expected to maintain interest, especially ahead of upcoming economic indicators.

Dollar Index and Global Currency Trends

Despite the rupee’s gain, the dollar index was trading higher by 0.16% at 99.36, reflecting overall global strength in the US dollar. This partially limited the rupee’s rise. The dollar index measures the value of the greenback against a basket of six major currencies.

Global investors remain cautious after a US federal appeals court temporarily stayed a ruling against former President Donald Trump’s reciprocal tariffs, which had initially caused fluctuations in the dollar’s performance. The uncertainty surrounding US trade policies could influence forex trends globally, including the INR-USD pair.

Equity Market Reaction

The Indian stock market opened cautiously with the 30-share BSE Sensex dipping by 35.68 points to 81,597.34, while the Nifty remained flat at 24,833.70. The volatility in equity markets added to the cautious outlook in currency trading, despite strong foreign fund flows and crude support.

Investors also remained watchful as they await the release of India’s GDP growth data, which could offer new insights into the country's macroeconomic trajectory. Analysts suggest that if the GDP numbers surpass expectations, the rupee may strengthen further in upcoming sessions.

RBI’s Positive Economic Outlook

The Reserve Bank of India (RBI) in its annual report released on May 29 affirmed that India is expected to remain the fastest-growing major economy in the world, even in FY26. This reinforces confidence in the rupee’s long-term stability and underpins a supportive macroeconomic framework for continued FII participation.

The RBI’s positive projection is a key driver of market sentiment, helping the rupee resist headwinds from global currency pressures.

Conclusion

The rupee's appreciation on May 30 is a direct result of a favourable blend of lower oil prices and robust foreign fund inflows, tempered slightly by a stronger dollar index and volatile equity markets. As the country braces for fresh GDP data, and with the RBI projecting strong economic growth, the outlook for the Indian rupee remains cautiously optimistic.

Investors will closely watch global cues, crude price movements, FII behaviour, and key economic data to gauge the future trajectory of the rupee. In the short term, maintaining macroeconomic stability and attracting continued capital inflows will be crucial to sustaining the rupee’s momentum.

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