On Thursday, the Indian rupee went further down and is presently at 89.94 (provisional) against the U.S dollar, under the pressure of various global and domestic influences. It was not the time to lighten on the local currency as prices of crude oil increased, the flow of foreign funds continued to decline and the U.S. dollar remained firm.
In the early trade in the foreign exchange market of interbank, the rupee was trading marginally down at 89.96 against the greenback. It experienced increased volatility in the day oscillating between an intraday low of 90.13 and an intraday high of 89.73 before leveling out at 89.94, which is lower than its closing point.
Players in the forex market blamed the fall of the rupee on the continuous demand of the dollar by importers and foreign investors pulling out of the domestic equities. The dollar index which reflects the performance of the U.S. currency versus a handful of six leading world currencies moved up 0.02 percent to 98.70 and this puts strain on emerging market currencies such as the rupee.
Another factor that was causing the weakness of domestic unit was the crude oil prices. The international benchmark, Brent crude, increased by 0.85 percent to reach a price of $60.47 per barrel in the future trade which has raised concerns in regards to the importation bill and inflationary pressure in India.
The cautious attitude was reflected in equity markets. The yardstick Sensex dropped 780.18 points to close with 84,180.90 and the Nifty dropped drastically by 263.90 points to close with 25,876.85. The investor confidence was weakened by weak global cues and continual selling by foreign investors.
The exchange data show that the foreign institutional investors (FIIs) sold equities in ₹1,527.71 crore on Wednesday and this is a continuation of capital outflow.
In the meantime, providing certain macroeconomic assistance, the government reestablished the growth perspective of India. Even in its recent forecast, which was published on January 7, it estimated that the GDP would grow by 7.4 percent in the current financial year.
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