Rupee Roars Back: INR Gains on Dollar as Powell's Remarks Signal Potential Rate Cuts

The Indian Rupee kicked off Wednesday's trading session on a strong note, appreciating by 13 paise to open at 83.39 against the US Dollar. This positive momentum was largely fueled by Federal Reserve Chairman Jerome Powell's recent comments, which hinted at the possibility of interest rate cuts later in the year, boosting market sentiment.

Forex traders were keenly observing the dollar's performance, which weakened globally following Powell's remarks.

The dollar index, which gauges the greenback's strength against a basket of six major currencies, saw a marginal decline of 0.05 percent, settling at 104.20. This weakening dollar provided a favorable environment for the domestic currency.

Furthermore, the price of Brent crude oil, a key factor influencing the Rupee's trajectory, edged up by 0.17 percent to $87.59 a barrel.

Despite the slight increase in oil prices, the overall market sentiment, buoyed by the prospect of US rate cuts, provided sufficient impetus for the Rupee to strengthen.

Anuj Choudhary, a Research Analyst at Sharekhan by BNP Paribas, noted that the Rupee's upward movement was also supported by positive domestic markets and a retreating US Dollar.

He anticipates that the Rupee could find support in the range of 83.20 to 83.00, while facing resistance between 83.60 to 83.80 in the near term.

On the domestic front, Indian equity benchmarks showcased a mixed performance. The BSE Sensex witnessed a slight dip of 11.23 points or 0.02 percent, trading at 72,176.60.

Conversely, the NSE Nifty inched up by 1.85 points or 0.01 percent to 21,955.55. Foreign Institutional Investors (FIIs) remained net sellers in the capital markets on Tuesday, offloading equities worth Rs 2,511.74 crore, according to exchange data.

This renewed strength in the Rupee offers a glimmer of optimism for the Indian economy, potentially easing import costs and providing stability amidst global economic uncertainties.

All eyes will now be on upcoming economic data and further cues from central bank policies, both domestically and internationally, to chart the Rupee's continued journey.