The Indian rupee appreciated by 9 paise to settle at 85.57 against the US dollar on Monday, buoyed by strong foreign institutional investor (FII) inflows. Further gains were capped by rising global crude oil prices, a stronger US dollar, and mixed cues from domestic equities, forex traders said.At the interbank foreign exchange, the local currency opened at 85.62, hit an intra-day high of 85.51 and a low of 85.68, before closing at 85.57, stronger than its previous close of 85.66, PTI reported.FIIs drive rupee strength, but crude and DXY limit upsideForeign institutional investors were net buyers, pumping Rs 2,301.87 crore into domestic equities on Tuesday, exchange data showed.“The USD-INR spot pair remains range-bound between 85.00 and 86.00, awaiting a decisive trigger,” said Anindya Banerjee, Head of Currency & Commodity at Kotak Securities. He noted that comfortable liquidity conditions, aided by the recent cash reserve ratio (CRR) cut, have softened forward premiums due to narrowing interest rate differentials between India and the US, making hedging less attractive for exporters.Banerjee added, “We expect the RBI to remain active in the forex market to curb excess volatility. India’s stable macro fundamentals continue to provide support to the rupee.”Equities mixed, dollar index strengthens, crude climbsThe BSE Sensex closed 53.49 points lower at 82,391.72, while the Nifty edged up to 25,104.25.Globally, the dollar index (DXY) rose 0.15% to 99.09, indicating a strengthening US dollar against major currencies.“The next major directional cue for USD-INR could come from risk sentiment and the broader dollar trend. A sustained move above 100 in DXY could push USD-INR past 86.00, possibly toward 86.50,” Banerjee said.Meanwhile, Brent crude was up 0.18% at $67.16 per barrel in futures trading.Global sentiment hinges on US-China talks, CPI dataAnuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said, “Optimism over US-China trade talks boosted global risk appetite, but a stronger dollar and rising crude limited rupee gains.”He added that US CPI data due this week could be a key trigger. “USD-INR is likely to trade in the 85.35 to 86 range in the near term,” Choudhary said.
