The Indian rupee experienced a decline against the US dollar on Thursday, as it fell 22 paise to close at 82.59 (provisional). This depreciation was attributed to a strong greenback in the overseas market and a negative trend in domestic equities.
At the interbank foreign exchange, the rupee opened at 82.36 against the dollar and settled at 82.59 (provisional) by the end of the day, marking a 22 paise drop from its previous close. Throughout the day, the rupee fluctuated between a high of 82.35 and a low of 82.66 against the US currency.
The rise of the dollar index, which measures the strength of the dollar against a basket of six currencies, further contributed to the rupee’s decline. The dollar index increased by 0.21% to reach 103.10, putting additional pressure on the Indian currency.
Another factor influencing the rupee’s performance was the movement in crude oil prices. Brent crude futures, the global oil benchmark, advanced by 0.66% to reach USD 76.45 per barrel. As crude oil prices climbed, it weighed on the domestic currency.
According to Anuj Choudhary, a Research Analyst at Sharekhan by BNP Paribas, the rupee depreciated as the US dollar rose to a seven-week high due to optimism surrounding debt ceiling talks. This development in the US, along with upbeat housing starts data, supported the American currency and impacted the rupee negatively.
Choudhary further mentioned that the rupee was likely to trade with a negative bias due to the underlying strength of the US dollar. However, there was potential for the rupee to find some support at lower levels due to improved global risk sentiments and optimism regarding the resolution of debt ceiling talks.
On the domestic equity market front, the 30-share BSE Sensex closed 128.90 points or 0.21% lower at 61,431.74 points, while the broader NSE Nifty declined by 51.80 points or 0.28% to 18,129.95 points.
Foreign Institutional Investors (FIIs) were net buyers in the domestic capital market on Wednesday, purchasing shares worth Rs 149.33 crore, as per exchange data.
In summary, the Indian rupee faced depreciation against the US dollar due to a strong greenback in the global market and a negative trend in domestic equities. Factors such as the strength of the US dollar, optimism surrounding debt ceiling talks, and movements in crude oil prices influenced the rupee’s performance. The outlook for the rupee was predicted to remain negative, although improved global risk sentiments and positive developments in debt ceiling talks could offer some support at lower levels.