Mumbai, Mar 20 (PTI) Falling for the eighth straight session, the rupee declined 16 paise to close at over two-month low of 83.19 against the US dollar on Wednesday, weighed down by a strong American currency against major rivals overseas and elevated crude oil prices.
Besides, recent flights of foreign capital from Indian capital markets also dented sentiments, forex traders said.
However, a recovery in domestic equity markets cushioned the downside, they added.
At the interbank foreign exchange market, the local unit opened at 83 and touched the intraday low of 83.19 against the greenback. The local unit finally settled at 83.19 against the dollar, registering a loss of 16 paise from its previous close.
On Tuesday, the rupee depreciated 13 paise to 83.03 against the US dollar.
“The Indian rupee depreciated against the dollar on Wednesday to a two-month low, pressured by importer dollar demand, debt repayment outflows and weakness in most Asian peers.
“Additionally, a rally in the Dollar Index ahead of the Fed meeting outcome also weighed on sentiments,” Sriram Iyer, Senior Research Analyst at Reliance Securities, said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.28 per cent higher at 104.11.
“The US Dollar strengthened on the weak Euro and Pound after disappointing inflation data. German PPI declined by 0.4 per cent in February 2024 vs forecast of (-) 0.1 per cent,” said Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas.
Brent crude futures, the global oil benchmark, fell 0.78 per cent to USD 86.70 per barrel.
“We expect the rupee to trade with a negative bias on the strong US Dollar and expectations of a bounce back in crude oil prices. However, positive global equities may support the domestic currency.
“Traders will watch out for the Federal Open Market Committee (FOMC) meeting outcome. Markets expect the monetary policy to remain unchanged but will look forward to Fed Chair Jerome Powell’s speech for further guidance and Fed’s Dot plot,” Choudhary added.
On the domestic equity market front, Sensex advanced 89.64 points, or 0.12 per cent, to settle at 72,101.69. The Nifty rose 21.65 points, or 0.1 per cent, to close at 21,839.10.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Wednesday as they sold shares worth Rs 2,599.19 crore, according to exchange data.
“In the overseas markets, the US Dollar Index extended gains against the basket of currencies this Wednesday afternoon session in Asia ahead of the FOMC meeting. The Euro was weaker against the greenback in Wednesday afternoon trade in Asia as ECB Officials hinted at a June cut.
“The Pound/Sterling was also trading weaker against the greenback in Wednesday afternoon trade in Asia after headline inflation fell to 3.4 per cent…The Japanese Yen tumbled against the greenback in Wednesday afternoon trade as a potentially hawkish Fed meeting outcome flag risks to the Japanese currency,” Iyer said. PTI DRR DRR BAL BAL
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