Image for representational purposes only
| Photo Credit: Reuters

The rupee extended its recovery for the second straight session and settled with a gain of 13 paise at 86.40 (provisional) against the U.S. dollar on Wednesday (January 15, 2025), tracking favourable cues from domestic equity markets and softening crude oil prices.

The American currency index also descended from a record peak, adding to the gaining momentum in the local unit, though it remained under pressure from continuous exit of foreign institutional investors, forex traders said.

At the interbank foreign exchange, the rupee opened at 86.50 and slipped to the intraday low of 86.55 against the greenback. It also touched A high of 86.28 before ending the session at 86.40 (provisional) against the dollar, registering a gain of 13 paise from its previous close.

On Tuesday (January 14, 2025), the rupee rebounded from its lowest-ever level and settled with a gain of 17 paise at 86.53 against the dollar.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee gained for the second consecutive session on weak US dollar and soft U.S. 10-year treasury yields. A pullback in the domestic equities and overnight decline in crude oil prices also favoured the rupee. However, FII outflows capped sharp gains.

Analysts attributed the weakening dollar to a lower-than-expected producer price index, as per the latest data released in the US.

Going ahead, Choudhary said the U.S. inflation is expected to remain elevated and it may lead to a recovery in the US dollar, which is likely to put pressure on the rupee.

“Traders may take cues from CPI data from U.S. and speeches from various Fed speakers today. USD-INR spot price is expected to trade in a range of ₹86.25 to ₹86.65,” he added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.22% lower at 108.87.

Brent crude, the global oil benchmark, rose 0.35% to $80.20 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex climbed 224.45 points, or 0.29%, to settle at 76,724.08 points, while the Nifty rose 37.15 points, or 0.16%, to 23,213.20 points.

Foreign institutional investors (FIIs) offloaded equities worth ₹8,132.26 crore on Tuesday (January 14, 2025).

Government data released on Tuesday (January 14, 2025) showed that wholesale price inflation rose to 2.37% in December 2024, led by a spike in manufactured products even though prices of food items eased.

Another data on Monday (January 14, 2025) showed retail inflation declined to a four-month low of 5.22% in December amid the easing of prices in the food basket, fuelling expectations that the Reserve Bank of India (RBI) will reduce the key interest rate in upcoming monetary policy review on February 7.

The inflation based on the Consumer Price Index (CPI) eased for the second month in a row after it breached the RBI’s upper tolerance level of 6% in October.

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.

The rupee depreciated 8 paise to settle at an all-time low of 84.50 (provisional) against the U.S. dollar
| Photo Credit: istock.com

The rupee depreciated 8 paise to settle at an all-time low of 84.50 (provisional) against the U.S. dollar on Thursday (November 21, 2024), dragged down by massive sell-off in domestic equity markets and surging crude oil prices amid a volatile geopolitical situation.

According to forex traders, the American currency strengthened due to safe-haven appeal amid escalating tension between Russia and Ukraine, while the continuous outflow of foreign funds also put pressure on the domestic unit.

At the interbank foreign exchange, the rupee opened at 84.41 and touched the lowest-ever level of 84.51 against the greenback during intra-day. The unit ended the session at 84.50 (provisional) against the dollar, surpassing its previous all-time low closing level of 84.46 recorded on November 14.

On Tuesday (November 19, 2024), the rupee settled flat at 84.42 against the U.S. dollar.

The foreign exchange market was closed on Wednesday (November 20, 2024) due to assembly elections in Maharashtra.

Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said the rupee weakened as pressure mounted due to the dollar scaling higher above 106.65 amidst renewed global uncertainties with geopolitical tensions between Russia and Ukraine adding to global risk aversion.

At the same time, the sell-off in domestic equity markets was fuelled after the Adani Group faced bribery and fraud charges in the US. “This has further fuelled FII outflows, continuing the trend of capital flight from Indian markets,” Mr. Trivedi said.

“The rupee’s trading range is expected between 84.35 and 84.65, with continued weakness likely in the near term,” Mr. Trivedi added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.04% at 106.66.

Brent crude, the global oil benchmark, surged by 1.35% to $73.93 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex tumbled 422.59 points, or 0.54%, to close at 77,155.79 points, while Nifty tanked 168.60 points, or 0.72%, to settle at 23,349.90 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday (November 19, 202), as they offloaded shares worth ₹3,411.73 crore, according to exchange data.