Due to a persistent outflow of foreign funds and a rise in demand for US currency from banks and importers, the rupee fell 15 paise to settle at 83.34 against the US dollar on Wednesday.
Forex traders claim that despite a strong buying trend in the domestic equity market, investors’ concerns about volatile crude oil prices and their fear of a disruption in global trade through the Red Sea route prevented them from feeling more upbeat.
The local currency opened at 83.21 at the interbank foreign exchange and fluctuated intraday against the dollar between a peak of 83.20 and a low of 83.35. At last, the local currency closed at 83.34 against the US dollar, down 15 paise from its previous close.
On Tuesday, the domestic currency settled at 83.19 against the dollar.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the Indian rupee depreciated on dollar demand from foreign banks and importers.
“FII outflows also weighed on the rupee. However, positive domestic markets and the weak tone in the US dollar cushioned the downside,” he said but added that the rupee is likely to trade with a slight negative bias on month-end dollar demand from oil marketing companies and importers.
“USD-INR spot price is expected to trade in a range of Rs 83 to Rs 83.70,” he said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading marginally lower at 101.07 on Wednesday. Global oil price benchmark Brent crude slipped 0.16 percent to USD 80.94 per barrel.
In the domestic equity market, the 30-share BSE Sensex jumped 701.63 points or 0.98 percent to settle at a fresh peak of 72,038.43 points. The broader NSE Nifty soared 213.40 points or 1 percent to 21,654.75 points.
Foreign Institutional Investors (FIIs) bought equities worth Rs 2,926.05 crore on Wednesday, according to exchange data.
According to Jateen Trivedi, VP Research Analyst at LKP Securities, the dollar index’s weakness has generally kept the rupee stable within this range.
“However, the broader trend is a gradual decline over the past few months, with the RBI providing support around the 83.40-83.50 zones. The global holiday week shall keep range bound volatility continued with range break possible on lower side likely in coming sessions,” Trivedi said.
(Source: PTI)
