On Friday, the Indian rupee fell by 7 pais to close at 89.43(provisional) against the U.S dollar as fresh strength in the green back and positive movement in the global crude oil price were taking a toll on the local currency. The session had the rupee starting off slightly lower at 89.41 and reached a low of 89.49 at interbank foreign exchange market. Although it made short-term gains to recover, the currency finally settled at 89.43 which is a slight decrease of the value at the end of Thursday.
The rupee pressure was also seen to be partially because of the dollar index, which went up by 0.18 to 99.69 that was reflecting the overall broad-based gains that the U.S. currency had on the major global currencies. Analysts observed that the sentiment was also worsened due to the rising price of crude oil. The international standard price, Brent crude, rose 0.27 percent to cost 63.51 a barrel in future contracts, and this has raised some concern on the import bill and the inflation in India.
The same gentle spirit was reflected in domestic equity markets. The Sensex benchmark was down 13.71 points to fall to 85,706.67, and the Nifty fell 12.60 points to end 26,202.95. Some of the reasons cited by the market players in the low performance included mixed global signals and profit recording among some of the heavyweight index funds.
To make it worse, foreign institutional investors (FIIs) turned to be net sellers in the equity market. In line with the exchange data, the amount of shares that was sold by the FIIs on Thursday amounted to 1,255.20 crore, which added to the general atmosphere of risk-aversion. Currency traders claimed that the continued outflow of FII is one of the reasons that affect the movement of the rupee in the short term.
In the future, analysts believe that the rupee will be contained within a range, and its movement will be largely dependent on the global crude trends, the strength of the U. S. dollar and other domestic macroeconomic factors. Traders in the market will also be paying close attention to future economic report releases, and political events.
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