On July 31, 2023, the Indian rupee witnessed a depreciation of 5 paise to close at 82.23 against the U.S. dollar. This decline in the value of the rupee can be attributed to several factors, including surging crude oil prices and the strength of the U.S. dollar against major currencies worldwide. Additionally, month-end dollar demand from importers and foreign capital outflows further weighed on the local currency’s performance.
At the interbank foreign exchange, the domestic unit opened at 82.23 against the U.S. dollar. It eventually settled at the same level of 82.23 (provisional) after a fall of 5 paise from its previous close. Throughout the day, the rupee fluctuated between the highest level of 82.21 and the lowest level of 82.29 against the dollar.
Forex traders commented on the prevailing market sentiment, stating that the strength of the U.S. dollar and the ongoing surge in crude oil prices, with WTI crude oil surpassing the USD 80/barrel mark, played a significant role in the rupee’s depreciation. However, the positive sentiment in the domestic equity markets provided some cushioning effect on the rupee.
Experts also expressed their outlook on the rupee, stating that it may trade with a negative bias due to the strong dollar and some selling by Foreign Institutional Investors (FIIs) over recent sessions. However, the improved global risk appetite might support the rupee at lower levels.
The dollar index, which measures the strength of the U.S. dollar against a basket of six major currencies, rose by 0.07% to 101.70. Brent crude futures, the global oil benchmark, were trading 0.41% higher at $85.34 per barrel.