Rupee Dips 11 Paise to 94.74 as Strong Dollar Weighs on Local Currency
The Indian rupee declined by 11 paise to close at 94.74 against the U.S. dollar on Tuesday, pressured by a firm greenback and weak domestic equity markets, though lower crude oil prices helped limit the fall, forex traders said.
At the interbank foreign exchange market, the rupee opened at 94.73 and moved in a range of 94.63 to 94.92 before settling at 94.74, down from its previous close of 94.63. The dollar index, which measures the greenback against six major currencies, edged up 0.07% to 101.09 amid a hawkish Federal Reserve and uncertainty over the U.S.-Iran trade deal.
“The rupee declined on a firm U.S. dollar and weak domestic markets. Importers’ demand for hedging also weighed on the domestic currency. However, falling crude oil prices and a softening in U.S. Treasury yields cushioned the downside. The U.S. waiver on sanctions on Iranian oil has led to a sharp fall in oil prices,” said Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan.
Brent crude, the global oil benchmark, fell 0.54% to $77.48 per barrel in futures trade. Meanwhile, domestic equity indices ended sharply lower, with the Sensex plunging 893 points (1.16%) to 76,200.68 and the Nifty dropping 279 points (1.16%) to 23,824.10.
Foreign institutional investors were net sellers, offloading equities worth Rs 635.91 crore on Monday, according to exchange data.
V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, said the rupee is likely to trade in a range of 94.60 to 94.95 in the near term. “The future trend will be significantly influenced by data on FCNR B deposits mobilised by commercial banks. If this scheme succeeds in mobilising a big amount, as many people believe, the rupee can appreciate over a period, assisted by the low crude prices. As things stand, there is no risk of significant depreciation of the rupee,” he added.
Choudhary expects the rupee to trade with a negative bias in the near term due to the strengthening U.S. dollar and weak global markets.
