On day-end, the Rupee dropped by 4 paise. Subsequently, it was valued at 84.02 (provisional) against the US dollar on Wednesday, which analysts said is due to the slump witnessed in the domestic equity markets. This decline in the INR vs USD rate was a result of investors avoiding riskier assets characterized by an unstable world economy over a period of time. Some positivity was noted by means of a weaker dollar to leading foreign currencies and reduction in the prices of crude oil, it was pointed out by the Forex traders regarding rupee’s decline.
At the interbank foreign exchange market, the trading session opened with the rupee quoted to be at 83.96, while the currency has been changing slightly and, on average, within the range of 83.95 to 84.01 throughout the day. All through most of the session, the rupee remained range-bound within a much tighter band of 83.95 to 83.98, which could, therefore, be viewed as a sign of moderate risk-taking by the market in the INR vs USD rate. But, in the last hour of the trading hours, the rupee made a disappointing loss and closed at 84.02, which was relatively lower than the previous closing of 83.98.
The pressure on the rupee was in sync with the developments in the domestic equity markets, where benchmark indices came under significant selling pressure. Simultaneously the BSE Sensex declined and marked 202.80 points at which it stabilized at 82,352.64, and NSE Nifty declined by 81.15 points to close at 25,198.70. The selling pressure in equities further resulted in the bearish outlook on the rupee.
On the international front, the measured dollar index with a basket of six major world currencies went down by 0.17 percent, reaching 101.65. Although the dollar fell sharply, this decline helped the rupee to limit its fall to a greater extent.
Moreover, Brent, which is the international reference price for oil, dropped by 0.46 per cent to the trading price of 73.41 cents per barrel in the future markets. The lower crude price is usually a positive to India’s economy because of the lower import bill, which has aided in restricting rupee loss.
Nonetheless, the FIIs were net buyers in the Indian capital markets during the year, and their value stood at ₹ 1,029. 25 crore.
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