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The rupee began trading on a flat note today, dipping slightly by 1 paisa to 84.08 against the US dollar, as persistent foreign fund outflows and a strong US dollar continued to affect market sentiment, according to PTI. The local currency saw some pressure from muted domestic equities and the rising strength of the American dollar in global markets. However, easing crude oil prices and potential support from the Reserve Bank of India (RBI) might provide stability for the rupee at lower levels.
At the interbank foreign exchange, the rupee started at 84.08 against the US dollar, moving marginally within an early range that briefly touched 84.07. This minor depreciation follows Monday's close, where the rupee ended slightly stronger at 84.07, just 1 paisa higher than today's open.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, shared that the rupee has been trading within a narrow range and is likely to continue doing so as foreign portfolio investors maintain steady demand for dollars. He noted that these foreign fund outflows have been a major source of pressure on the rupee, as they continue to draw capital out of Indian markets.
Meanwhile, the dollar index, which assesses the US dollar against a set of six major currencies, saw a modest gain, trading 0.02 percent higher at 104.33. This steady dollar strength contributed to the rupee's recent lack of momentum. In the commodities market, Brent crude futures showed a marginal uptick, gaining 0.01 percent to reach USD 71.43 per barrel. However, the global oil benchmark has dropped by 6 percent recently, despite the United States' plans to increase its strategic reserves. Commenting on crude's movement, Bhansali remarked that tensions in the Middle East could result in temporary stability, though renewed hostilities might once again impact oil prices.
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On the domestic front, the equity markets opened weakly, with the BSE Sensex declining by 387.61 points, or 0.48 percent, to 79,617.43 points. The NSE Nifty also registered a dip, falling 120.60 points, or 0.5 percent, to settle at 24,218.55 points. This weak performance in equities further influenced market sentiment around the rupee.
According to PTI, foreign institutional investors (FIIs) were net sellers on Monday, selling off shares worth Rs 3,228.08 crore, as per data from the stock exchanges. The ongoing foreign fund outflows have been one of the primary factors applying downward pressure on the rupee and could potentially continue to influence its movement in the coming sessions.
(With inputs from PTI)
