The Indian rupee experienced a 5-paise decline, reaching 82.95 against the US dollar on Tuesday, attributed to firm crude oil prices and foreign fund outflows. The rupee commenced at 82.94 against the dollar at the interbank foreign exchange market, marking a 4-paise drop compared to the previous day’s closure at 82.90. Initial trading witnessed the local currency fluctuating within a narrow range of 82.93 to 82.95 against the dollar. By 9:15 am, the rupee was trading at 82.95, indicating a 5-paise decline against the US dollar.
Forex dealers attributed the rupee’s weakened position to a stronger US dollar and resilient bond yields, notably in anticipation of the US Federal Reserve’s interest rate decision. The US dollar index, reflecting the greenback’s performance against a basket of six major currencies, recorded a 0.20% increase, reaching 103.64. Meanwhile, Brent crude, the global benchmark for crude oil, remained above USD 86 per barrel, hovering near four-month highs.
Losses further influenced the rupee’s performance in the domestic stock market. The benchmark BSE Sensex witnessed a decline of 398.79 points or 0.55%, settling at 72,349.63, while the broader Nifty dropped by 120.10 points or 0.54%, closing at 21,935.60.
Adding to the pressure, Foreign Institutional Investors (FIIs) divested equities worth Rs 2,051.09 crore on Monday, per exchange data.
Overall, the rupee’s depreciation against the US dollar resulted from multiple factors, including firm crude oil prices, foreign fund outflows, US dollar strength, and domestic equity market losses. These dynamics underscored the challenges faced by the Indian currency amidst global economic uncertainties and fluctuations in key commodities like crude oil.
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