Withdrawal of foreign funds from domestic equities and upward movement in crude oil prices also weighed on the Indian currency, forex traders said.
| Photo Credit: Reuters
The rupee depreciated by 16 paise to 83.10 against the US dollar in early trade on Monday, taking cues from subdued equity market sentiment and a firm American currency against major rivals overseas.
Withdrawal of foreign funds from domestic equities and upward movement in crude oil prices also weighed on the Indian currency, forex traders said.
At the interbank foreign exchange, the domestic unit opened weak at 83.04 and hit the lowest level of 83.10 against the greenback, registering a fall of 16 paise from its previous close.
On Friday, the rupee gained 19 paise to close at 82.94 against the dollar.
Analysts attributed the gain in rupee to JP Morgan’s announcement that it will include Indian government securities in its global bond index starting June 2024, a move which is expected to bring in USD 25-30 billion of inflows into the Indian debt market.
On the other hand, the dollar strengthened due to an increased month-end demand of the American currency by importers and rising US Treasury yield.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell marginally by 0.01 per cent to 105.58.
Brent crude futures, the global oil benchmark, advanced 0.19 per cent to $93.45 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 20.68 points or 0.03 per cent lower at 65,988.47 points. The broader NSE Nifty declined 12.65 points or 0.06 per cent to 19,661.60.
India’s foreign exchange reserves declined $867 million to $593.037 billion in the week ended September 15, the Reserve Bank said on Friday.
Foreign Institutional Investors (FIIs) were net sellers in the capital market on Friday as they offloaded shares worth ₹1,326.74 crore, according to exchange data.
