Rupee falls 4 paise to close at 84.09 against US dollar

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The Indian rupee depreciated by 4 paise to close at 84.09 (provisional) against the US dollar on Wednesday, impacted by weak domestic markets and heightened demand for the dollar from importers at the month-end. According to PTI, the Reserve Bank of India (RBI) was suspected of intervening to support the local currency at lower levels, as per forex traders.

The rupee opened at 84.06 against the greenback at the interbank foreign exchange and remained within a narrow range through the session. It concluded at 84.09 (provisional), marking a 4 paise decline from the previous close. On Tuesday, the rupee had gained by 2 paise, settling at 84.05 against the US dollar. The rupee has been fluctuating near its record low, having hit a historical closing low of 84.10 on October 11, according to PTI.

In the broader currency market, the US dollar showed a slight decline, with the dollar index - which measures the greenback's strength against a basket of six major currencies - trading 0.15 per cent lower at 104.16. The dollar's weakening was attributed to weaker-than-expected employment data from the US, as reported by PTI. A softer dollar often provides support to the rupee and other emerging market currencies.

Meanwhile, Brent crude oil, a key global benchmark, recorded a 0.53 per cent rise to USD 71.50 per barrel in futures trading. Higher oil prices often impact India's import bill, as the country relies heavily on imported crude, which in turn can put pressure on the rupee.

Analysts indicate that the rupee is likely to maintain a mixed to negative bias in the short term. Anuj Choudhary, a Research Analyst at Sharekhan by BNP Paribas, stated, "We expect the rupee to trade with a mixed to negative bias due to weak domestic markets and continued foreign institutional investor (FII) outflows. Month-end dollar demand from importers may also weigh on the rupee." However, Choudhary noted that a softer US dollar, amid weak jobs data, may lend some support to the rupee at lower levels. Analysts and traders are keeping an eye on the upcoming US GDP data for Q3 2024 and the non-farm payrolls report, which could provide further direction.

On the domestic equity front, the stock market faced declines as the Sensex dropped by 426.85 points, or 0.53 per cent, to close at 79,942.18 points. The Nifty also fell, losing 126.00 points, or 0.51 per cent, to end at 24,340.85 points.

Foreign institutional investors were net sellers in the capital markets on Tuesday, with shares worth Rs 548.69 crore offloaded, according to exchange data. FIIs have generally shown a tendency to sell, impacting both equity and currency markets, as reported by PTI.

The rupee's movement in the coming days is expected to reflect a blend of global and domestic factors, from US economic data and FII flows to oil prices and market sentiment.

(With inputs from PTI)