The Indian Rupee was under pressure on Tuesday after closing at an all-time low versus the US dollar the previous day. Currency opened weak and finished at 15 paise lower at 86.82 per dollar, which was the lowest closure since March 17, as per the report rates. This new decline underlines the outward pressure on the domestic currency, which thus has already weakened by 1.2 per cent in August and 1.4 per cent since the beginning of the calendar year.
The poor performance of the Rupee is mainly blamed on the continuous dollar demand and huge selling of equity by Foreign Portfolio Investors (FPIs). According to analysts, over six consecutive sessions, global funds have been dumping Indian equities, making them cautious of the market. FPIs offloaded 6,082.47 crore worth of shares on Monday alone, which is the highest amount since May 30. The last six days have seen equity outflow of 19,635.38 crore or a total of 19,635.38 crore in the secondary market, and this is one more justification to exert pressure on the currency.
At the same time, the US dollar rose, as there were expectations related to the trade agreement between the United States and the European Union. The dollar index, which measures the performance of the greenback with respect to six important currencies of the globe, climbed up by 0.12% to 98.74 and had registered gains of 3.2 % thus far in the month, which is its best monthly run this year.
The prices of crude oil in the commodities market were on a rising trend as a result of the US-EU trade. Brent futures gained 0.47 per cent to USD 70.37 a barrel, and the West Texas Intermediate crude (WTI) was up 0.54 per cent to USD 67.07 a barrel at 3:40 PM IST.
Market analysts feel that as long as there is no reversal of FPI flows and unless world dollar strength becomes more moderate, the Rupee could be vulnerable in the short term, particularly as the rest of the world faces trade and equity market volatility.
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