The Indian rupee slipped by 2 paise to 84.85 against the US dollar due to foreign fund outflows, rising crude oil prices, and a higher dollar index. The domestic currency's decline comes ahead of key inflation data.
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The Indian rupee slipped by 2 paise to a near all-time low of 84.85 against the US dollar in early trade on Thursday, primarily due to foreign fund outflows and an uptick in crude oil prices. Forex traders noted that the rupee was also under pressure from an elevated dollar index and the muted performance of domestic equity markets, while market participants were awaiting domestic inflation data scheduled for release later in the day.
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At the interbank foreign exchange market, the rupee opened at 84.85 against the dollar, marking a decline of 2 paise from its previous closing level of 84.83. On Wednesday, the Indian currency had gained 2 paise against the greenback, closing at 84.83.
The dollar index, which measures the strength of the US dollar against a basket of six major currencies, was trading slightly lower by 0.12 percent at 106.26, providing some relief to the rupee. However, the price of Brent crude oil, a key factor influencing India's import costs, rose by 0.12 percent to USD 73.61 per barrel in futures trade, which added to inflation concerns.
In the domestic equity markets, the benchmark Sensex was trading with a modest gain of 53.59 points, or 0.07 percent, at 81,579.73, while the Nifty gained 2.10 points, or 0.01 percent, to reach 24,643.90 points. Both indices had closed the previous session with marginal gains.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Wednesday, offloading shares worth Rs 1,012.24 crore, according to exchange data. This outflow of foreign funds contributed to the downward pressure on the rupee.
As per PTI, the rupee’s current weakness comes amid heightened global uncertainties, including concerns about rising oil prices and inflationary pressures. Market experts suggest that the domestic currency may remain under pressure in the near term, with investors closely monitoring upcoming economic data and global financial trends.
PTI reports that while the rupee’s depreciation is concerning, the overall economic fundamentals, including the growth outlook and forex reserves, continue to provide some support against major currency fluctuations. However, analysts warn that unless global crude prices stabilise and foreign fund inflows improve, the rupee could face further pressure in the coming weeks.
(With inputs from PTI)
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