The Indian rupee appreciated by 23 paise to 96.65 against the US dollar in early trade on Friday, supported by a slight weakening of the US dollar and suspected intervention by the Reserve Bank of India (RBI).
The rupee opened on a positive note as the dollar index slipped towards 102 and Brent crude prices fell to around $103 per barrel. US President Donald Trump said the US would not attack Iran before the midterm elections, easing some concerns in the market.
At the interbank foreign exchange market, the rupee opened at 96.74 before strengthening to 96.65, gaining 23 paise over its previous close.
Market experts said the US dollar index extended its losses towards 102 as US Treasury yields declined following a well-received 30-year bond auction. The auction indicated continued investor demand for long-term government debt.
They added that lower crude oil prices eased inflation concerns after Trump cited productive discussions between the US and Iran and ruled out an attack before the midterm elections.
Markets assigned an 82 per cent probability to the Federal Reserve keeping interest rates unchanged this month, while the probability of a rate hike in December stood near 81 per cent, according to the experts.
Meanwhile, Federal Reserve Governor Christopher Waller said further rate increases would likely be necessary to bring inflation back to the central bank’s 2 per cent target. However, he emphasised that policymakers retained flexibility over the pace of monetary tightening.
On Thursday, the rupee had depreciated by 13 paise to close at 96.88 against the US dollar.
Indian equity markets also opened higher on Friday, supported by buying in information technology stocks.
The Sensex rose 183.43 points, or 0.26 per cent, at the opening, while the Nifty started the session at 22,314.95, up 83.15 points, or 0.37 per cent.
Foreign institutional investors (FIIs) sold equities worth Rs 12,943 crore on Thursday, while domestic institutional investors (DIIs) bought shares worth Rs 10,703 crore.
FIIs have sold equities worth Rs 36,210 crore through exchanges so far in October.