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The rupee failed to resist pressure from strengthening American currency and lost 7 paise to settle at 85.11 (provisional) against the U.S. dollar on Monday despite a sharp recovery in domestic equities.
According to forex traders, the rupee stayed weak due to significant dollar demand. Moreover, higher crude oil prices triggered by volatile geopolitical situation also dented sentiments.
They said the dollar index is expected to remain elevated as the U.S. Federal Reserve indicated slower-than-expected rate cut in 2025.
At the interbank foreign exchange, the rupee opened at 85.02 and touched the lowest level of 85.13 (provisional) against the greenback before ending the session at 85.11 (provisional) against the greenback.
On Friday, the rupee saw some recovery from its all-time low level and settled 9 paise higher at 85.04 against the U.S. dollar.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee fell amid strong demand for the American currency. Also, the US dollar gained on weakness in Chinese yuan.
A rise in crude oil prices also pressured the rupee, though it was cushioned by positive domestic equities.
“FII outflows may also weigh on the rupee. However, a recovery in the domestic markets may support the rupee at lower levels. Traders may take cues from CB consumer confidence data from the U.S. USD-INR spot price is expected to trade in a range of 84.90 to 85.15,” Choudhary added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.38% at 107.75.
Brent crude, the global oil benchmark, rose 0.07% to $72.99 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex closed higher by 498.58 points, or 0.64%, at 78,540.17 points, while Nifty jumped 165.95 points, or 0.70% to close at 23,753.45 points. Both the indices had ended sharply lower in the previous session on Friday.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday, as they offloaded shares worth ₹3,597.82 crore, according to exchange data.
The latest RBI data showed India’s forex reserves dropped by $1.988 billion to $652.869 billion for the week ended December 13. In the preceding week, the overall reserves had dropped by $3.235 billion to $654.857 billion.
Published – December 23, 2024 04:41 pm IST
