The Indian rupee closed slightly lower on Friday losing 3 pais to reach 90.64 (provisional) of the U.S. dollar due to the strength of the American currency in the international market and a drastic fall in the domestic equity markets.
In the interbank forex market, the rupee started at 90.69 against the dollar and traded in a tight spread throughout the day. It hit a high of 90.60 and a low of 90.79 at which it closed marginally below where it finished.
The subdued movement was due to a stronger dollar index and easy-going investor mood after the huge losses incurred in Indian stocks, as suggested by forex traders. The dollar index that is a gauge of the performance of the greenback against a basket of six big world currencies was trading 0.10% up at 97.01, further straining emerging market currencies, such as the rupee.
Brent crude oil futures – the global standard – in the commodities market dropped 0.04% to $67.49 a barrel. Reduced crude prices generally support the rupee since India is a significant importer of oil, but there was wider market weakness which limited the profits.
At the domestic equity level, there was a severe sell-off in the benchmark indices. The BSE Sensex and the NSE Nifty declined by 1,048.16 points and 336.10 respectively to close at 82,626.76 and 25,471.10 respectively.
Exchange data revealed that foreign institutional investors (FIIs) had been net buyers on Thursday, and had acquired equities to the value of 108.42 crore.
In the meantime, India also released another quarter of Consumer Price Index (CPI), with January retail inflation standing at 2.75 which was the first release under the new base year.
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