Rupee pares initial gains, settles 1 paisa higher at ₹84.53 against US dollar

The rupee on Friday hit a seven-month high and rose past the 84 per dollar level on sustained foreign fund inflows and stronger domestic data, but pared the gains and settled for the day higher by just 1 paisa at ₹84.53 against the greenback.

In a highly volatile trade, the rupee on Friday touched an intra-day high of ₹83.76 -- the highest levels since October 2024 -- but failed to sustain the momentum and ended the session on a flat note with gains of just 1 paisa.

Forex traders said goods and services tax (GST) collections for April were robust at ₹2.37 lakh crore, an all-time high, reflecting the health of domestic demand. Moreover, strong PMI data, wherein India's manufacturing sector growth hit 10-month high in April, enthused investors further.

However, caution lingers, as they noted any escalation in tensions between India and Pakistan could swiftly reverse gains and pressure the rupee, much like past geopolitical episodes.

At the interbank foreign exchange, the domestic unit opened at ₹83.98 and moved between the intra-day high of ₹83.76 and the low of ₹84.55 against the greenback. The unit ended the session at ₹84.53 (provisional), registering a gain of 1 paisa over its previous closing level.

On Wednesday, the rupee surged 42 paise to ₹84.54 against the US dollar.

The forex market was closed on Thursday on account of Maharashtra Day.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.39% at 99.85.

Brent crude, the global oil benchmark, fell 0.51% to USD 61.81 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex advanced 259.75 points, or 0.32 per cent, to 80,501.99, while the Nifty advanced 12.50 points, or 0.05 per cent to 24,346.70.

Foreign institutional investors (FIIs) bought equities worth ₹50.57 crore on a net basis on Wednesday, according to exchange data.

On the domestic macroeconomic front, the growth momentum in the Indian manufacturing sector improved in April, with output increasing at the fastest pace since June 2024, on the back of another strong expansion in order books, a monthly survey said on Friday.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) rose from 58.1 in March to 58.2 in April, indicating the strongest improvement in the health of the sector for 10 months.

GST collections rose 12.6% year-on-year to an all-time high of about ₹2.37 lakh crore in April, which the government said shows the resilience of the Indian economy and the effectiveness of cooperative federalism.

The gross GST mop-up was ₹2.10 lakh crore in April 2024 -- the second-highest collection ever since GST was rolled out on July 1, 2017. The net mop-up was ₹1.92 lakh crore.