The Indian rupee dropped by 37 paise to 85.96 per dollar on Thursday, as the demand from importers and foreign banks weighed down, as did the rise in international crude prices. It meant that the closing price on that day was less than the previous day’s final price of 85.59.
Forex traders report that the ongoing increase in US bond yields is troubling global investors. Because the gap between Indian and US interest rates is shrinking, foreign investors are now less interested in Indian assets. As a result, many are taking their money out, placing further pressure on the rupee.
Uncertainty in the market and reduced confidence among investors are, in part, caused by rising crude oil costs because of Middle Eastern geopolitics. Investors demanding more dollars have placed more downward pressure on the local currency.
The rupee opened at 85.59 in the interbank foreign exchange market and later fell to 86.11, reached an intra-day high of 85.58, and ended at 85.96. Volatility in the rupee is occurring in response to rising stress in the global financial system and rising and falling commodity prices.
At the same time, the dollar index, which looks at the dollar against six main currencies, was up 0.25 per cent to 99.80, reflecting its strong position worldwide.
In oil markets, the price of Brent crude, the main oil benchmark for the world, was down 1.45 per cent at USD 63.97 per barrel. Yet, the continuing higher prices are straining India’s trade situation and adding to rising inflation.
At the end of trading today, the BSE Sensex dropped 644.64 points (0.79%) to finish at 80,951.99, and the NSE Nifty fell 203.75 points (0.82%) to 24,609.70. The good news is that foreign institutional investors bought Rs 2,201.79 crore of equities yesterday.
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