Indian Rupee Closes 6 Paise Lower Amid Trade Uncertainty and Weak Equities
Mumbai, February 24: The Indian rupee traded in a tight band on Tuesday before closing 6 paise lower at 90.95 against the US dollar on a provisional basis, pressured by a firm greenback and rising global crude oil prices.The local currency opened at 90.91 in the interbank foreign exchange market and moved within a narrow range of 90.91 to 90.97 during the session. It finally settled at 90.95, down from its previous close of 90.89 on Monday, when it had gained 5 paise.
RBI Intervention Suspected as Rupee Holds Above 91 Mark
Market participants indicated that possible intervention by the Reserve Bank of India helped contain sharp volatility. Traders suggested that the central bank may have sold dollars to prevent the rupee from breaching the psychological 91 level.According to forex market commentary, the rupee is expected to trade in the range of 90.75 to 91.20 on Wednesday.
Strong Dollar Index and Higher Brent Crude Add Pressure
The dollar index, which measures the US dollar’s strength against a basket of six major currencies, was trading 0.16 percent higher at 97.86. A firmer dollar typically exerts downward pressure on emerging market currencies, including the rupee.At the same time, Brent crude, the global oil benchmark, rose 0.27 percent to USD 71.68 per barrel in futures trade. Higher crude oil prices tend to widen India’s import bill, adding pressure on the domestic currency.
Domestic Equity Market Decline Weighs on Sentiment
Weakness in domestic equities further dampened investor sentiment. The benchmark indices witnessed a sharp correction, with the BSE Sensex tumbling 1,068.74 points to close at 82,225.92. The Nifty 50 also fell 288.35 points to settle at 25,424.65.The decline in equities coincided with uncertainties surrounding the India US trade deal, adding to pressure on the rupee.
Foreign Fund Inflows Provide Partial Support
Despite the headwinds, foreign institutional investors offered some support to the currency. Exchange data showed that foreign investors bought equities worth Rs 3,483.70 crore on Monday.While foreign inflows provided a cushion, the rupee remained under pressure amid global trade uncertainties, firm crude oil prices, and a strengthening US dollar.
Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
The information provided is for general informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Readers are advised to rely on their own assessment and judgment and consult appropriate financial advisers, if required, before taking any investment-related decisions.