Image for representative purposes only
| Photo Credit: Reuters

The rupee depreciated 16 paise to close at 86.56 (provisional) against the U.S. dollar on Thursday (January 16, 2025), dragged down by a strong American currency overseas, elevated crude oil prices and foreign fund outflows.

“However, positive domestic equity markets provided some cushion at the lower level,” forex traders said.

At the interbank foreign exchange, the rupee opened at 86.42 and touched the intraday high of 86.37 before ending the session at 86.56 (provisional) against the greenback, 16 paise lower from the previous close.

The local unit settled with a gain of 13 paise at 86.40 against the dollar on Wednesday (January 15, 2025), a day after rebounding 17 paise from its lowest-ever level.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee declined due to increased demand for dollars by importers.

“Importers may continue to buy dollars, which may further pressurise the rupee. Traders may take cues from retail sales and weekly unemployment claims data from the US. USD-INR spot price is expected to trade in a range of ₹86.35 to ₹86.75,” he said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.05% higher at 108.97.

Brent crude, the global oil benchmark, fell 0.12% but stayed elevated at ₹81.93 per barrel in futures trade.

Analysts said concerns over geopolitical uncertainties will likely add volatility in the dollar and crude until the U.S. gets a new administration under President Donald Trump next week.

In the domestic equity market, the 30-share BSE Sensex climbed 318.74 points, or 0.42%, to settle at 77,042.82 points, while the Nifty rose 98.60 points, or 0.42%, to 23,311.80 points.

Foreign institutional investors (FIIs) offloaded equities worth ₹4,533.49 crore on Wednesday (January 15, 2025).

Image for representative purposes only
| Photo Credit: Reuters

The rupee dropped 9 paise to 85.61 against the U.S. dollar in early trade on Tuesday (December 31, 2024), weighed down by significant strengthening of the American currency in the overseas market and a muted trend in domestic equities.

Forex traders said the rupee has been under continued pressure amid the Federal Reserve’s cautious stance and the “Trump factor” driving up the dollar index (DXY) and US 10-year yields.

Additionally, on the domestic front, slowing growth, widening trade deficit, and persistent foreign fund outflows have further fueled the rupee’s depreciation.

At the interbank foreign exchange, the rupee opened on a weak note at 85.54 then fell further to 85.61 against the American currency, registering a fall of 9 paise over its previous close, on month-end dollar demand from importers and oil marketing companies.

On Monday (December 30, 2024), the rupee dropped 4 paise to 85.52 against the U.S. dollar.

According to Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP, the US Dollar stood tall in 2024 and recorded strong gains against most currencies, as investors braced for fewer US rate cuts and the incoming Trump administration’s policies.

“It would be posting strong gains in 2024 against most currencies and its gains have been buoyed by rising treasury yields, a falling yen and European currencies,” Mr. Bhansali said.

Mr. Bhansali further added that rupee is expected to remain volatile with Tuesday (December 31, 2024) being the last day of roll-over of positions.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.14% down at 107.97.

Brent crude, the global oil benchmark, was up 0.50% at $74.36 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex was trading 548.90 points or 0.70% down at 77,699.23 points in morning trade, while Nifty was down 138.90 points or 0.59% to 23,506.00 points.

Foreign Institutional Investors (FIIs) offloaded ₹1,893.16 crore in the capital markets on a net basis on Monday (December 30, 2024), according to exchange data.

On the domestic macroeconomic front, India’s current account deficit (CAD) moderated marginally to $11.2 billion or 1.2% of GDP year-on-year in the July-September quarter of 2024-25, according to Reserve Bank data released on Friday (December 27, 2024).

The CAD, an indicator of the country’s external payment scenario, was $11.3 billion or 1.3% of GDP during the second quarter of 2023-24.