Photo used for illustration purpose only
| Photo Credit: Reuters

The rupee recovered slightly from its record low and settled with a gain of 4 paise at 85.87 (provisional) against the U.S. dollar on Thursday (January 9, 2025) amid firm American currency and elevated level of crude oil prices.

According to forex analysts, relentless selling in domestic equities and outflow of foreign capital kept the local unit under pressure, while dollar strengthened on improved macroeconomic prospects in the U.S.

They said, uncertainties related to trade restrictions ahead of the change in US administration under President Donald Trump continued to fuel dollar demand, while concerns over Federal Reserve’s move to delay interest cut kept the country’s benchmark treasury yields elevated.

At the interbank foreign exchange, the rupee opened at its historic low level of 85.94 and touched an intra-day peak of 85.84 before ending the session at 85.87 (provisional) against the greenback, 4 paise higher from its previous close.

On Wednesday, the rupee plunged 17 paise to settle at its all-time low closing level of 85.91 against the dollar.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the surge in US bond yields and FII outflows pressured the rupee. The US macroeconomic data was mixed, with weekly unemployment claims favouring the greenback while non-farm employment data was disappointing.

“We expect rupee to trade with a negative bias on weak domestic markets, strong dollar and rising US treasury yields. Elevated crude oil prices and FII outflows also put downside pressure on the domestic currency. However, any RBI intervention may support rupee at lower levels. Investors may watch out for non-farm payrolls report. USD-INR spot price is expected to trade in a range of Rs 85.75 to Rs 86.10,” Choudhary said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.05 per cent higher at 108.98. The 10-year US bond yields also remained elevated at 4.67 per cent.

Brent crude, the global oil benchmark, fell 0.03 per cent to USD 76.14 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex declined sharply by 528.28 points, or 0.68 per cent, to settle at 77,620.21 points, while the Nifty dropped 162.45 points, or 0.69 per cent, to 23,526.50 points. The indices have been on the downward track for the past three sessions.

Foreign institutional investors (FIIs) offloaded Rs 3,362.18 crore in the capital markets on a net basis on Wednesday, according to exchange data.

The rupee fell 11 paise, revisiting its all-time low of 84.09 (provisional) against the US dollar, tracking a weak domestic equity market and continued FII outflows.
| Photo Credit: Reuters

The rupee on Friday (October 11, 2024) fell 11 paise, revisiting its all-time low of 84.09 (provisional) against the US dollar, tracking a weak domestic equity market and continued FII outflows.

The situation in the Middle East continues to be volatile and might keep oil prices high and the rupee weak in the short term, according to forex traders.

At the interbank foreign exchange, the rupee opened at 83.97 against the dollar, 1 paisa higher than previous day’s close. It rose to the day’s high of 83.96 but tumbled to 84.10 before revisiting its all-time low of 84.09 (provisional), 11 paise lower than its previous close.

The domestic unit had closed at 83.98 on Thursday.

“After keeping it in a range below 83.99 since August 8, 2024, the Reserve Bank of India (RBI) finally allowed rupee to weaken past 84 as FPIs who have emerged as big sellers in equities continued to buy dollar to take their money out of the country,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

“We can now expect the rupee to move to 84.25 in the short term. Importers will continue buying at all dips and exporters may now hold their exports with a stop below 83.95. The Iran/Israel/Lebanon news also does not seem good and could keep oil strong and the rupee weak,” he said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was down 0.09 per cent to 102.89 points.

Brent crude, the international benchmark, was down 0.57% to $78.95 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex was down 230.05 points to close at 81,381.36, while Nifty declined 34.20 points to settle at 24,964.25.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday, as they offloaded shares worth ₹4,926.61 crore, according to exchange data.