Rupee's Slight Decline Amidst Market Pressures

The Indian rupee closed marginally lower at 85.57 against the US dollar on Friday, influenced by a mix of strong foreign capital inflows and adverse factors like negative equity market sentiment, rising crude oil prices, and a widening trade deficit.

Market Dynamics and Currency Performance

Opening strong at 85.28, the rupee fluctuated between 85.28 and 85.70 during the day before settling at 85.57. This marks a slight decrease from Thursday's close of 85.54. Forex traders noted the rupee's resilience despite the strength in Asian and European currencies.

Expert Insights on Rupee's Movement

"The rupee faced challenges in surpassing the 85.00 level, encountering selling pressure near 85.30. It's expected to trade within the 85.25 to 85.75 range in the coming week," shared Anil Kumar Bhansali of Finrex Treasury Advisors LLP.

Equities and External Factors

Domestic equities also reflected a downturn, with the BSE Sensex and NSE Nifty experiencing declines. Meanwhile, the dollar index slightly decreased by 0.12% to 100.75.

Trade Deficit and Foreign Investments

India's trade deficit reached a five-month high in April, with imports significantly outpacing exports. Despite this, foreign institutional investors remained optimistic, injecting Rs 8,831.05 crore into equities on Friday.

Commodities and Forex Reserves

Brent crude futures saw a minor increase, adding to concerns over India's import expenses. On a positive note, India's forex reserves rose by $4.553 billion, bolstered by a surge in gold assets.