Indian rupee has recovered by 8 paise and stands at 77.31 against the US dollar in early trade. Rupee opened at 77.35 against the American dollar at the interbank foreign exchange. The domestic currency slumped to 77.50 against US dollar on Thursday at market close.
The decline in rupee on Thursday was triggered by risk-off sentiments amid increasing concerns over inflation, weak domestic equities, surging US dollar in overseas market and foreign outflows.
Dollar index was trading 0.19 per cent lower at 104.65 whereas 30-share Sensex was trading 638.13 points or 1.21 per cent higher at 53,568.44 and NSE Nifty advanced 167.70 points or 1.06 per cent to 15,975.70. Global oil benchmark Brent crude futures rose 1.68 per cent to $109.25/bbl.
Foreign institutional investors were net sellers on Thursday as they offloaded shares worth Rs 5,225.75 crore.
India's headline inflation went up for the seventh straight month to reach an 8-year high of 7.79 per cent in April on rising food and fuel prices. Factory output measured in terms of the Index of Industrial Production (IIP) remaining subdued at 1.9 per cent in March.
As per forex traders, Indian rupee could see range-bound trade against the US dollar as broad dollar strength could offset losses from a rate hike by the RBI next month on rising domestic inflation.
"A likely more hawkish policy shift from the RBI and expectations of RBI intervention will possibly support the rupee this Friday," Senior Research Analyst at Reliance Securities Sriram Iyer told news agency PTI.
(With agency inputs)
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