Rupee rises 1 paisa to 86.67 against U.S. dollar in early trade

In the early hours of trading, forex traders observed that a sharp decline in domestic equity markets, coupled with a noticeable reduction in the country’s foreign exchange reserves, along with persistent outflows from Foreign Institutional Investors (FIIs), played a crucial role in limiting the rupee’s potential for further gains. These factors combined to create a challenging environment for the Indian currency, preventing it from sustaining upward momentum despite initial strength against the U.S. dollar.

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On Monday morning (February 24, 2025), the Indian rupee appreciated by 1 paisa, rising to 86.67 against the U.S. dollar. This uptick was primarily driven by the weakening of the U.S. dollar in the international markets, as the greenback saw a decline against a basket of global currencies, providing support to emerging market currencies like the rupee.

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Domestic Equity Drop, Forex Reserve Decline, and FII Outflows Restrict Rupee’s Further Gains

According to forex traders, a significant drop in the domestic equity markets during morning trade, coupled with a reduction in the country’s forex reserves and continued outflows from Foreign Institutional Investors (FIIs), limited the rupee’s potential for further gains.

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Rupee Opens Higher at 86.58, Settles at 86.67; Friday’s Gains Eroded

In the interbank foreign exchange market, the rupee opened at 86.58, appreciating by 10 paise against the U.S. dollar. However, it surrendered some of its early gains and settled at 86.67, just 1 paisa higher than Friday’s closing rate. On Friday, the rupee had also given up its initial gains, finishing 4 paise lower at 86.68 against the dollar.