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The Indian rupee opened on a steady note but soon fell by 2 paise to 84.07 against the US dollar during early trading on Wednesday. This decline is attributed to ongoing foreign fund outflows and a lacklustre performance in domestic equities.
Forex traders noted that the strength of the American currency in global markets has dampened investor sentiment, although easing crude oil prices and potential intervention from the Reserve Bank of India (RBI) might provide some support to the rupee at lower levels. In the interbank foreign exchange market, the rupee started at 84.06 against the dollar. However, it quickly slipped to 84.07, which marks a decline of 2 paise from its previous close of 84.05.
On Tuesday, the rupee managed to gain 2 paise, settling at 84.05 against the dollar. Despite this, the local currency has been struggling and remains close to its all-time low, having recorded its lowest closing level of 84.10 against the dollar on October 11.
Traders indicate that the rupee is under significant pressure primarily due to ongoing foreign fund outflows. "The Indian rupee remains firmly range-bound, trading between 83.90 and 84.10, with the RBI actively limiting any upside movement in the pair. This controlled approach suggests the rupee is likely to continue within this range, with a bias towards trading closer to the lower end," commented Amit Pabari, Managing Director of CR Forex Advisors.
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Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, was trading at 104.31. Brent crude oil, the global benchmark, rose by 0.51 per cent to USD 71.48 per barrel in futures trade, adding to the market's complexities.
On the domestic equity front, the Sensex saw a decline of 325.94 points, or 0.41 per cent, closing at 80,043.09 points. The Nifty also fell by 90.75 points, or 0.37 per cent, ending the day at 24,376.10 points. Foreign institutional investors (FIIs) were net sellers in the capital markets on Tuesday, offloading shares worth Rs 548.69 crore, according to data from exchanges.
As the rupee continues to face headwinds, market participants will be closely monitoring both domestic and international economic indicators for any potential impact on currency performance.
(With inputs from PTI)
