The rupee settled on a flat note at 83.13 (provisional) against the U.S. dollar on Friday amid negative equity markets and rising crude oil prices.
| Photo Credit: RAGHUNATHAN SR

The rupee settled on a flat note at 83.13 (provisional) against the U.S. dollar on Friday amid negative equity markets and rising crude oil prices.

Selling pressure from foreign equity investors weighed on the domestic unit which has been under pressure due to a stronger American currency for the past few weeks, forex traders said.

At the interbank foreign exchange market, the local unit opened weak at 83.17 and traded between the peak of 83.03 and the lowest level of 83.20 against the greenback.

The local unit finally settled flat at 83.13 (provisional). On Thursday, the rupee had risen 15 paise to close at 83.13 against the U.S. dollar.

Experts attributed the sharp gain in the rupee to RBI’s move as well as some softening in the greenback.

“It is worth highlighting that RBI’s intervention, particularly at 83.25, played a significant role in supporting the rupee. Additionally, the rupee benefited from a period of weakness in the dollar index,” said Jateen Trivedi, VP Research Analyst at LKP Securities.

Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the dollar declined after U.S. Federal Reserve Chair Jerome Powell on Thursday cautioned of a possibility of additional rate hikes, if warranted, on resilient economy and a tight labour market.

However, Mr. Powell’s remark that a surge in bond yields helped tighten the financial conditions led to expectations that the central bank may not hike rates for now.

“We expect rupee to trade with a slight negative bias as escalating tensions between Hamas and Israel may continue to deteriorate global risk sentiments. U.S. Dollar may bounce back as safe-haven demand may come into play and crude oil prices may rise further on concerns over supplies,” Mr. Chaudhary said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.05% to 106.20.

Global oil benchmark Brent crude futures climbed 1.27 per cent to $93.55 per barrel.

On the domestic equity market front, Sensex fell 231.62 points or 0.35% to settle at 65,397.62 points. The Nifty declined 82.05 points or 0.42% to 19,542.65 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday as they sold shares worth ₹1,093.47 crore, according to exchange data.

At the interbank foreign exchange, the domestic unit opened weak at 83.17 against the dollar and then touched the lowest level of 83.20 against the greenback. File

The rupee depreciated by 5 paise to 83.18 against the US dollar in early trade on Friday due to unabated foreign fund outflow amid rising crude oil prices.

Negative equity market sentiment and a strong dollar also weighed on the Indian currency, forex traders said.

At the interbank foreign exchange, the domestic unit opened weak at 83.17 against the dollar and then touched the lowest level of 83.20 against the greenback. It later traded at 83.18 against dollar, registering a loss of 5 paise over its previous close.

On Thursday, the rupee settled 15 paise higher at 83.13 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.03 per cent to 106.28.

Analysts attributed the decline in rupee to a record rise in US Treasury yield even as US Federal Reserve Chair Jerome Powell on Thursday hinted at a longer period of monetary tightening due to higher-than-expected inflation numbers.

“Trading boundaries are now set at 83.07 on the downside and 83.26 on the upside, with 83.20, appearing as a potential turnaround point for the day,” Anand James, Chief Market Strategist at Geojit Financial Services, said in his USD-INR outlook.

Global oil benchmark Brent crude futures rose 0.94 per cent to USD 93.25 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 161.15 points or 0.25 per cent lower at 65,468.09. The broader NSE Nifty declined 52.15 points or 0.27 per cent to 19,572.55.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday as they sold shares worth Rs 1,093.47 crore, according to exchange data.

The rupee snapped a four-day losing streak to close 21 paise higher at 83.02 against the U.S. Dollar on Friday, aided by the currency’s flow into domestic equities and likely supported by intervention from the Reserve Bank of India (RBI)

The Indian currency had hit its lifetime low of 83.23 against the U.S. Dollar on Thursday.
“We suspect it was heavy intervention from the central bank and some corporate inflows that pushed the pair lower,” said Anindya Banerjee, VP – Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd.

“Over the past one week, we think the RBI has been very active in defending the rupee and preventing it from going past the 83.30 mark [intraday].”

“Over the next one week, U.S. CPI and the trend in the Chinese currency will set the tone. We expect a broad range of 82.70 and 83.30 on spot,” he added.

India Forex and Asset Management Private Limited (IFA Global), in a note, said, “The rupee weakness continued this morning and opened at 83.14 amid higher crude and global dollar strength. However, positive sentiments in domestic equities and likely RBI intervention at higher levels helped the INR strengthen in the second half of the session.”

At the interbank foreign exchange, the domestic unit opened at 82.58, then touched the lowest level of 82.62. File
| Photo Credit: Special Arrangement

The rupee appreciated by 2 paise to 82.61 against the US dollar in early trade on Tuesday amid a weak American currency against major rivals overseas and positive domestic equity markets.

Retreating crude oil prices also supported the Indian currency even as outflow of foreign funds capped a sharp gain, forex traders said.

At the interbank foreign exchange, the domestic unit opened at 82.58, then touched the lowest level of 82.62. It later traded at 82.61 against the greenback, registering a gain of 2 paise over its previous close.

On Monday, the rupee settled 1 paisa higher at 82.63 against the US dollar.

The Indian currency was trading in the narrow range as market participants are awaiting the US jobs data to be released on Friday. Also, a close watch on the Chinese currency’s response to the country’s slowing factory output and other macroeconomic indicators weighed on the rupee, forex analyst said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.20 per cent lower at 103.85.

Brent crude futures, the global oil benchmark, fell 0.05% to USD 84.38 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 182.08 points or 0.28 per cent higher at 65,178.68. The broader NSE Nifty advanced 53.65 points or 0.28 per cent to 19,359.70.

Foreign Institutional Investors (FIIs) were net sellers in capital markets on Monday as they offloaded shares worth ₹1,393.25 crore, according to exchange data.