The rupee’s depreciation by 7 paise, settling at 83.13 against the US dollar in early Tuesday trade, unfolded against the backdrop of several influencing factors. Notably, firm crude oil prices and an outflow of foreign funds from domestic equity markets exerted pressure on the Indian currency. Opening at 83.10, a slight dip from the previous close of 83.06, the rupee faced headwinds in the foreign exchange market.
The dollar index, a measure of the greenback’s strength against a basket of six currencies, exhibited a modest decline of 0.01%, resting at 102.17. This nuanced movement in the dollar index contributed to the rupee’s dynamic as it navigated the early trading session.
Despite the rupee’s dip, it found support from a marginal weakness in the American currency and positive sentiment in the equity markets, as noted by forex traders. On the preceding day, the Indian currency closed at 83.10 against the dollar, showcasing a degree of resilience amidst the fluctuating global economic landscape.
In the domestic stock market scenario, the 30-share BSE Sensex witnessed a marginal decline of 55.98 points or 0.08%, standing at 71,259.11. Simultaneously, the NSE Nifty 50 experienced a dip of 26.90 points or 0.13%, closing at 21,391.75. These fluctuations in the equity markets added another layer to the overall economic dynamics influencing the rupee’s trajectory.
The role of institutional investors also played a pivotal role in shaping market dynamics. Foreign institutional investors (FIIs) were net sellers of Indian shares, amounting to ₹33.51 crore on Monday. Conversely, Domestic Institutional Investors (DIIs) displayed a contrasting behavior, net purchasing shares totaling ₹413.88 crore, according to provisional data available on the exchanges.
The intricate interplay between global factors, such as crude oil prices and the dollar index, and local elements, including equity market trends and institutional investment patterns, underscores the complexity of the financial landscape. As market participants closely monitored these variables, the rupee performance became a testament to the intricate dance between international and domestic influences on India’s currency markets.
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