The Indian rupee experienced a decline of 18 paise against the US dollar on Monday, closing at 82.85 (provisional). The rupee’s fall was primarily attributed to the strength of the greenback in the international market. However, the currency’s losses were restricted by the positive performance of domestic equities and the downward trend in crude oil prices in global markets, according to forex traders. The day began with the rupee opening at 82.80 against the dollar and eventually settling at 82.85 (provisional), marking a decrease of 18 paise from its previous close. Throughout the trading session, the rupee reached a high of 82.70 and a low of 82.85 against the US dollar. The dollar index, which measures the strength of the greenback against a basket of six currencies, experienced a slight decline of 0.09 percent, reaching 103.10. Additionally, Brent crude futures, the global benchmark for oil prices, saw a decrease of 0.16 percent, settling at USD 75.46 per barrel.
Anuj Choudhary, a Research Analyst at Sharekhan by BNP Paribas, explained that the rupee’s depreciation was primarily driven by the underlying strength of the US dollar and the Reserve Bank of India’s (RBI) purchase of dollars to bolster its foreign exchange reserves. However, the rupee’s losses were cushioned by the downward trend in crude oil prices and the positive performance of domestic equities. The US dollar also eased slightly due to a dovish statement by Federal Reserve Chair Jerome Powell and the ongoing debt ceiling talks. Choudhary further commented on the future outlook for the rupee, stating that it may trade negatively due to risk-off sentiments surrounding the debt ceiling talks. However, expectations of a further decline in crude oil prices, coupled with Powell’s dovish hints, may prevent a significant fall in the rupee. Market participants are advised to remain cautious ahead of the release of the Federal Open Market Committee (FOMC) minutes later in the week.
Choudhary expects the USD/INR spot to trade between 82.40 and 83.30 in the near term. In the domestic equity market, the 30-share BSE Sensex closed 234.00 points or 0.38 percent higher at 61,963.68 points, while the broader NSE Nifty advanced 111.00 points or 0.61 percent, reaching 18,314.40 points. Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday, offloading shares worth Rs 113.46 crore, according to exchange data. Meanwhile, the Reserve Bank of India reported that India’s foreign exchange reserves increased by USD 3.553 billion to USD 599.529 billion for the week ended May 12. This marked the second consecutive week of growth, with the overall reserves rising by USD 7.196 billion to USD 595.976 billion in the previous week.