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Rupee Slips 3 Paise, Closes at 83.19 Against US Dollar

The Indian rupee experienced a marginal decline of 3 paise against the US dollar, closing at 83.19 (provisional) on Tuesday. This drop was attributed to a stronger US dollar and the outflow of foreign funds. However, the Indian currency found some support from positive sentiments in the equity market and a decrease in crude oil prices, which helped limit the rupee’s fall, as observed by forex traders.

Starting the day at 83.17, the rupee fluctuated between 83.10 and 83.21 against the dollar in intra-day trading before settling at 83.19 (provisional), marking a 3-paise decrease from its previous close of 83.16 on Friday. Forex markets remained closed on Monday due to the Christmas holiday.

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Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, highlighted that the rupee depreciated due to the US dollar’s recovery and foreign institutional investor (FII) outflows. Nonetheless, positive trends in domestic markets and a dip in crude oil prices provided some stability. Choudhary suggested that the rupee might show a slight positive bias amid expectations of a potential interest rate reduction by the US Federal Reserve. However, he cautioned that demand for the US dollar from imports and FII selling pressure could limit any gains. Additionally, geopolitical tensions in the Red Sea might exert pressure on the rupee at higher levels. Choudhary projected a trading range of Rs 82.90 to Rs 83.50 for the USD-INR spot price, considering the upcoming house price index data from the US.

Simultaneously, the dollar index, gauging the dollar’s strength against a basket of six currencies, was marginally up by 0.02 percent, trading at 101.35 on Tuesday. Brent crude, the global oil price benchmark, experienced a minimal increase of 0.03 percent, reaching USD 79.09 per barrel.

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On the domestic front, the 30-share BSE Sensex surged by 229.84 points or 0.32 percent to close at 71,336.80, while the broader NSE Nifty climbed 91.95 points or 0.43 percent to 21,441.35.

Recent Reserve Bank of India (RBI) data indicated a substantial increase in India’s forex reserves by USD 9.112 billion to reach USD 615.971 billion by the week ended December 15, one of the highest increments observed in a week.

Furthermore, foreign institutional investors were net sellers in the equity market on Friday, offloading shares valued at Rs 2,828.94 crore, as per exchange data.

Naiteek Bhatt

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