Mumbai, Dec 23 (PTI) The rupee depreciated 7 paise and settled for the day at 85.11 against the US dollar on Monday, amid continued strength in the dollar index bolstered by the Fed’s policy stance.
According to forex traders, notwithstanding a positive trend in domestic equities, the rupee stayed weak due to significant dollar demand. Moreover, higher crude oil prices triggered by volatile geopolitical situation also dented sentiments.
They said the dollar index is expected to remain elevated as the US Federal Reserve indicated slower-than-expected rate cut in 2025.
At the interbank foreign exchange, the rupee opened at 85.02 and touched the lowest level of 85.13 and settled for the day at 85.11 against the greenback, registering a loss of 7 paise over its previous close.
On Friday, the rupee saw some recovery from its all-time low level and settled 9 paise higher at 85.04 against the US dollar.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said the rupee traded weak amid continued strength in the dollar index bolstered by the Fed’s policy stance.
“With the holiday season approaching, market participation is expected to thin out, potentially reducing volatility in the near-term. The rupee’s trading range is projected between 84.85 and 85.25, as global cues and year-end market dynamics influence the sentiment,” he said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.48 per cent at 108.13.
Brent crude, the global oil benchmark, fell 0.37 per cent to USD 72.67 per barrel in futures trade.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee fell amid strong demand for the American currency. Also, the US dollar gained on weakness in the Chinese yuan.
A rise in crude oil prices also pressured the rupee, though it was cushioned by positive domestic equities.
“FII outflows may also weigh on the rupee. However, a recovery in the domestic markets may support the rupee at lower levels. Traders may take cues from CB consumer confidence data from the US. USD-INR spot price is expected to trade in a range of 84.90 to 85.15,” Choudhary added.
In the domestic equity market, the 30-share BSE Sensex closed higher by 498.58 points, or 0.64 per cent, at 78,540.17 points, while Nifty jumped 165.95 points, or 0.70 per cent to close at 23,753.45 points. Both the indices had ended sharply lower in the previous session on Friday.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday, as they offloaded shares worth Rs 168.71 crore, according to exchange data.
The latest RBI data showed India’s forex reserves dropped by USD 1.988 billion to USD 652.869 billion for the week ended December 13. In the preceding week, the overall reserves had dropped by USD 3.235 billion to USD 654.857 billion. PTI HVA DRR
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