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The Indian rupee has been weakening in opposition to the greenback for the previous one month as a result of FPI outflows from Indian equities.
The rupee continues its downward trajectory.
Continuing its falling streak, the Indian rupee on Friday declined 5 paise to shut at its contemporary all-time low of 84.37 (provisional) in opposition to the US greenback. The home foreign money has been weakening for the previous few weeks as a result of FPI outflows from Indian equities.
However, the rupee had additionally touched 84.38 throughout the day, earlier than lastly ending the day at its lowest closing of 84.37 in opposition to a greenback.
“The rupee has been on a low previously few days although it’s nonetheless the second-best performing foreign money amongst its pears after the election of Trump because the US president. However, FPIs and oil firms are fixed patrons of the foreign money pair and subsequently, we’re not discovering the rupee to realize. An RBI intervention in a giant means could assist the rupee,” said Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors.
Forex traders said the US Federal Reserve’s recent decision to cut interest rates signals a shift in the global financial landscape. Moreover, with Donald Trump’s tax and trade policies influencing global markets, volatility could re-enter the rupee’s trajectory.
At the interbank foreign exchange, the rupee opened at 84.32 against the US dollar. During the session, the local currency touched a high of 84.31 and a low of 84.38. It finally settled at 84.37 (provisional), a loss of 5 paise against its previous close.
On Thursday, the rupee slipped 1 paisa to close at a fresh lifetime low of 84.32 against the US dollar.
In the last three sessions, the local unit has lost 28 paise against the greenback.
The rupee hit a record low on account of extending sell-off in the domestic markets and continuous foreign fund outflows. Overnight gains in crude oil prices also weighed on the rupee, said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.
However, the softening of the US Dollar index cushioned the downside. The dollar softened as the US Federal Reserve cut interest rates by 25 bps in line with street estimates. The Fed Chair Jerome Powell said in his presser that the US economy was strong and some downside risks seemed to have diminished.
In its latest monetary policy announcement, the US Fed reduced its benchmark rate by 0.25 basis points to a target range of 4.5 per cent-4.75 per cent.
In its accompanying statement, the Fed adopted a neutral-to-dovish tone, acknowledging balanced risks in inflation and employment.
“We expect the rupee to trade with a negative bias on overall strength in the US dollar and weak domestic markets. FII outflows may also weigh on the rupee. However, any intervention by the Reserve Bank may support the rupee at lower levels,” Choudhary added.
Meanwhile, the greenback index, which gauges the buck’s power in opposition to a basket of six currencies, was buying and selling 0.01 per cent decrease at 104.50.
Brent crude, the worldwide oil benchmark, fell 1.10 per cent to USD 74.80 per barrel in futures commerce.
In the home fairness market, the 30-share BSE Sensex fell 55.47 factors, or 0.07 per cent, to shut at 79,486.32 factors, whereas Nifty declined 51.15 factors, or 0.21 per cent, to settle at 24,148.20 factors.
Foreign Institutional Investors (FIIs) have been internet sellers within the capital markets on Thursday, as they offloaded shares price Rs 4,888.77 crore, in line with trade knowledge.
(With PTI Inputs)
