The Indian rupee stayed flat at 84.07 against the US dollar amid high crude oil prices and continued foreign fund outflows. Domestic equities saw modest gains, providing some cushion to the local currency.
Representational Pic
- Rupee remains steady at 84.07 against US dollar.
- Foreign investors continue selling Indian equities.
- Brent crude rises 1.27 percent to USD 75.91 per barrel.
The Indian rupee remained unchanged in early trade on Thursday, holding steady at 84.07 against the US dollar. This stability comes amid persistent high crude oil prices and continued withdrawal of foreign funds from the capital market. However, there were some positive signs for the rupee, as the dollar retreated slightly from its elevated levels, and the domestic equity markets showed signs of recovery, according to forex traders.
At the interbank foreign exchange market, the rupee opened at 84.06 against the dollar, only to slip 1 paisa, settling back at the previous day's closing level of 84.07. According to PTI, on Wednesday, the rupee had recorded a marginal gain of 1 paisa, maintaining a slight edge over the greenback. Despite these small fluctuations, the local currency has faced challenges in recovering its value since October 11, when it hit its lowest point of 84.10 against the US dollar.
Analysts point out that the ongoing outflow of funds by foreign investors, who are seeking better returns from markets such as China, has hampered the rupee’s ability to bounce back. Additionally, the rise in US Treasury yields has spurred concerns about a slower-than-expected pace of interest rate cuts by the Federal Reserve, further dampening market sentiment.
The geopolitical climate, especially with the US presidential election on the horizon, has also led to a shift in investor preference towards safer assets, adding further pressure on the rupee, PTI reported. Nonetheless, the US dollar index, which measures the dollar’s strength against a basket of six major currencies, edged down by 0.07%, though it remained at a relatively high level of 104.20.
Meanwhile, crude oil prices continued their upward trajectory, with Brent crude, the global benchmark, rising by 1.27% to USD 75.91 per barrel in futures trade. The higher oil prices have been a significant factor weighing on the rupee, as India imports a large portion of its energy needs, which pushes up the country’s import bill.
On the domestic equity front, the Sensex saw a modest gain, rising 68.86 points, or 0.09%, to reach 80,150.84 points. However, the Nifty slipped by 23.50 points, or 0.10%, settling at 24,412.00 points.
Foreign institutional investors (FIIs) remained net sellers in the Indian capital markets on Wednesday, offloading shares worth Rs 5,684.63 crore, according to data from the exchanges. This continued selling pressure from foreign investors has been a key driver behind the rupee's ongoing struggles.
The combination of rising crude oil prices, sustained foreign outflows, and cautious market sentiment driven by geopolitical and economic factors has left the rupee under pressure. While the equity markets show some signs of resilience, it remains to be seen whether the local currency can find a foothold amid these external challenges.
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(With inputs from PTI)
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