On Wednesday, the rupee in India was trading against a basket of currencies with only a small depreciation but ended 4 paise down at 83.96 (provisional) against the US dollar. He pointed to the higher oil prices caused by the greenback recovery turmoil in the Middle Eastern region as some of the factors to explain the rupee depreciation in the INR vs USD rate.
Traders stated that a stronger dollar and higher crude oil prices played a role in the change in Rupee. However, support was derived from well-established domestic markets that offered some protection against the depreciation of the currency. At the interbank foreign exchange market, the rupee opened at 83.86 and even declined momentarily during the session depths of 83.97 before it closed at 83.96 (provisional) in the INR vs USD rate.
On the same note, the US dollar index, which shows its performance against some half a dozen other world currencies, was up by 0.31% to 103.28 points. At the same time, Brent crude, which serves as the international market for oil, was 1.22 percent more at USD 77.41 per barrel in the futures trade. While taking the global effects into account, the increase in crude oil prices also put pressure on the rupee.
On the domestic front, there was positive performance recorded in the equity market. The 30-company Bombay Stock Exchange index rose by 874.94 points, or 1.11%, closing at 79,468.01 points. Likewise, the index Nifty went up by 304.95 points, or 1.27 percent to end the season at 24,297.50 points.
Nevertheless, FIIs were net sellers in the capital markets on Tuesday, unloading stakes worth Rupees 3,531.24 crore as per the exchange data. While more and more money has been invested in the equities, the selling spree by FIIs and other external factors did not spare the rupee to dollar translation.
In all, while the rupee came under pressure both from the global and domestic factors, the equity market’s positive bias offered some comfort. Geopolitical activities and oil prices this may continue to be the most relevant drivers of the rupee’s performance in the coming periods.
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