The rupee slumped to 90.70 (provisional) on Friday against the US dollar, 36 paise after being pressured by the increasing geopolitical tensions in the US-Iran negotiations and a high increase in world crude oil prices. According to Forex traders, the state of increased uncertainty in the world markets and continued foreign fund withdrawals had a heavy burden on the local currency.
The local unit demonstrated a bit of tenacity in the early trade following the announcement of a status quo on the main policy rates by the Reserve bank of India which initially boosted the sentiment. These gains were however not long lived as selling pressure by the overseas investors and external factors assumed control towards the end of the session.
The rupee strengthened in the interbank foreign exchange market opening at 90.28 against the dollar and ranged against the dollar between a big range throughout the day. It peaked at 90.18 and then dropped to an intraday low of 90.83 and finally closed down at 90.70 as compared to its earlier close.
The dollar index, which measures performance of the greenback relative to 6 major currencies, was at 97.81 which gave slight relief to emerging market currencies, even though the index was slightly down by 0.01%.
The price of crude oil also increased at a scramble and this further pressurized the rupee. The world benchmark, Brent crude, was selling 1.38 per cent more at $68.48 per barrel in futures trade and this is making the future of the Indian import bill and inflation look bleak.
On the other hand, domestic equity markets had a good ending. The benchmark Sensex has gained 266.47 to end at 83,580.40 and the Nifty has gained 50.90 points to end at 25,693.70.
Although it was gained by the equity, the foreign institutional investors (FIIs) became net sellers following two trading sessions of acquiring, selling shares worth 2,150.51 crore on Thursday, in accordance with the exchange records, which further weakened currency mood.
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