The core benchmark of the Indian Rupee closed weaker for the second straight day on Wednesday, dragged lower by a fairly strong US Dollar and steepening global crude oil prices. The domestic currency that closed trade at 85.42 against the US dollar on Tuesday fell by 23 paise, down from its last close of 85.19, as per official exchange data.
The rupee’s dip occurred after the US dollar index added momentum after former US President Donald Trump pledged to bring back trade tensions with China. His comments added to spooked global markets and bolstered the greenback against most other major currencies.
The rupee is down for the second straight day, and in a week has lost almost ₹1.5 to the dollar compared with the previous five days that had seen the currency appreciate by nearly ₹1.5. The rupee made a setback after a rise of almost 5 percent from its record low of nearly 119 a US dollar, but foreign portfolio investors (FPIs) were still backing Indian equities. Global funds have raised ₹1,290.43 crore buying stocks on Tuesday itself, taking the open to its fifth straight day of buying spree. The cumulative inflow over the past four trading days has exceeded ₹17,890 crore, which indicates that investors are still coming in.
The movement in global crude oil prices upward, on worries over new sanctions on Iran, also added pressure to the rupee. At 3:40 PM IST, Brent crude futures were 1.30 per cent higher at $68.32, and US West Texas Intermediate (WTI) crude gained 1.35 per cent to $64.53 per barrel. India is concerned about its rising crude prices, which import a big slice of its oil needs, and which could push up inflationary pressures and fill the country with a larger current account deficit.
In the near term, market analysts expect the rupee to be under pressure due to the global uncertainty and high oil prices.
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