The Indian rupee faced a 21 paise decline against the US dollar on Monday, primarily influenced by the dollar’s strength on international forex markets and the escalating crude oil prices. The local currency concluded the day’s trading at 83.14 against the dollar, a decrease from Friday’s closing rate of 82.93.
The dollar index, which measures the greenback’s performance against a basket of six major currencies, showed a slight uptick of 0.08% to reach 105.67, remaining close to a six-month high.
Factors contributing to the rupee’s depreciation included the outflow of foreign investments and a subdued performance in the equity markets.
In contrast, on the preceding Friday, the rupee had experienced a 16 paise gain to close at 82.93 per dollar, following the significant news of India’s inclusion in JPMorgan’s flagship emerging market bond index. This inclusion is set to commence in June 2024 and is expected to result in an estimated $25-30 billion inflow into the Indian debt market, according to analysts.
However, the US dollar’s strength prevailed due to heightened demand by importers, coupled with rising US Treasury yields, which were prompted by concerns regarding the possibility of further interest rate hikes by the US Federal Reserve.
Simultaneously, crude oil prices surged on concerns of tightening global supplies. International benchmark Brent crude futures saw an increase of 0.45%, reaching $93.69 per barrel, while US West Texas Intermediate crude (WTI) gained 0.36%, rising to $90.35 per barrel.
On the domestic front, the Indian stock market displayed a subdued performance on Monday, mirroring weak global cues amidst apprehensions surrounding higher interest rates and wavering economic growth. The Sensex recorded a marginal gain of 14.54 points or 0.02%, closing at 66,023.69, while the Nifty 50 remained relatively flat, settling at 19,674.55.