The Indian rupee strengthened by 9 paise to reach 83.19 against the US dollar (equivalent to 23.1 against the UAE dirham) in early trading on Thursday.
This surge in value was attributed to the prevailing risk-on sentiments in the market following the US Federal Reserve’s somewhat dovish stance in its policy meeting.
Factors Behind Rupee’s Gains:
- Dovish US Fed: The US Federal Reserve maintained interest rates, and its chairman expressed satisfaction with the economy’s smooth deceleration. This dovish stance contributed to a softer US dollar in international markets.
- Weaker Dollar Abroad: A weakened US dollar in overseas markets, in part due to the Fed’s decision, had a positive impact on the Indian rupee’s performance.
- Positive Domestic Equities: The Indian currency also received support from positive trends in domestic equities, enhancing investor confidence.
Impact on Dollar Index and Bond Yields:
The decision by the US Federal Reserve led to a softening of the dollar index, a key indicator of the Dollar’s performance against other major currencies.
Additionally, the 10-year bond yield fell to 4.70, reflecting changing dynamics in the financial markets.
