The rupee saw some recovery from its all-time low level and appreciated 5 paise to 84.83 against the U.S. dollar. File
| Photo Credit: Reuters

The rupee saw some recovery from its all-time low level and appreciated 5 paise to 84.83 against the U.S. dollar in early trade on Friday (December 13, 2024) on the back of favourable domestic inflation data.

However, a strengthening American currency and volatile domestic equity markets amid foreign fund outflows capped the recovery in the local unit, forex traders said.

At the interbank foreign exchange, the rupee opened at 84.85 and inched up further to 84.83 against the greenback, registering a gain of 5 paise from its previous close.

On Thursday, the rupee fell 5 paise to end the session at the lowest level of 84.88 against the U.S. dollar.

The previous record low closing level was recorded on December 9, when the unit settled 20 paise lower at 84.86 against the dollar.

The latest official data released on Thursday (December 12) showed India’s retail inflation declined in November to 5.48% and came within the Reserve Bank’s comfort zone mainly due to easing food prices, creating headroom for a rate cut at the central bank’s rate-setting panel meeting under new Governor Sanjay Malhotra in February.

The country’s industrial production (IIP) growth, however, slowed to 3.5% year-on-year in October 2024, mainly due to poor performance of mining, power and manufacturing, as per official data released on Thursday.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.12% at 106.77.

Analysts said that the dollar has been strengthening after the U.S. inflation numbers came on expected lines, raising hopes for an interest rate cut by the Federal Reserve.

Brent crude, the global oil benchmark, rose 0.01 per cent to $73.42 per barrel in futures trade.

On the domestic equity market front, the 30-share benchmark index Sensex was trading 388.68 points, or 0.48% lower at 80,901.28 points. The Nifty was down 115.20 points, or 0.47%, to 24,433.50 points. Both the indices ended lower on Thursday.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday, as they offloaded shares worth ₹3,560.01 crore, according to exchange data.

At the interbank foreign exchange, the rupee opened at 84.70 against the greenback, then touched 84.73 in the initial trade, registering a fall of 7 paise over its previous close. Representational image.

The rupee fell 7 paise to trade at 84.73 against the U.S. dollar in early trade on Monday (December 9, 2024) dragged down by foreign fund outflows and a muted trend in domestic equities.

Forex traders said the rupee remains in a weakening mode due to dollar demand from importers and foreign banks.

At the interbank foreign exchange, the rupee opened at 84.70 against the greenback, then touched 84.73 in the initial trade, registering a fall of 7 paise over its previous close.

On Friday (December 5, 2024), the rupee appreciated by 5 paise to settle at 84.66 against the U.S. dollar.

“On the domestic front, all eyes will be on Industrial Production (IIP) and CPI data following last week’s RBI monetary policy announcement. The 50-basis point CRR cut provided much-needed liquidity and lent support to the Rupee,” CR Forex Advisors MD Amit Pabari said.

The Reserve Bank of India on Friday kept its key interest rate unchanged citing inflation risks, but cut the Cash Reserve Ratio that banks are required to park with the central bank, boosting money with lenders to support a slowing economy.

Mr. Pabari further said that a wave of IPO activity is expected to drive substantial inflows, offering additional support to the rupee.

“We anticipate the rupee’s downside to remain limited, with the USDINR pair likely to trade in a range of 84.50 to 85 in the near term,” Mr. Pabari added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.08 per cent at 106.14.

Brent crude, the global oil benchmark, rose 0.08 per cent to USD 106.15 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex was trading 76.29 points or 0.09 per cent down at 81,632.83 points in morning trade, while Nifty was down 24.20 points or 0.1 per cent to 24,653.60 points.

Foreign Institutional Investors (FIIs) offloaded Rs 1,830.31 crore in the capital markets on net basis on Friday, according to exchange data.

Meanwhile, India’s forex reserves increased by USD 1.51 billion to USD 658.091 billion for the week ended November 29, the RBI said on Friday. The overall reserves had dropped by USD 1.31 billion to USD 656.582 billion in the previous reporting week.