Rupee Falls 31 Paise to 92.32 Against US Dollar in Early Trade Amid Rising Oil Prices and FII Outflows
Rupee Opens Weaker in Early Thursday Trade
The Indian rupee depreciated by 31 paise to 92.32 against the US dollar in early trade on Thursday, pressured by foreign fund outflows, rising global crude oil prices, and a stronger US dollar amid ongoing tensions in the Middle East.At the interbank foreign exchange market, the domestic currency opened at 92.25 against the US dollar and further declined to 92.32. The fall comes after the rupee settled at 92.01 against the US dollar on Wednesday, when it had already weakened by 16 paise.
Traders said the weak opening in the domestic equity markets also added pressure on the local currency.
Middle East Tensions Push Oil Higher, Support Dollar
Market participants are closely tracking geopolitical developments in the Middle East, particularly around the Strait of Hormuz, which have triggered a sharp rise in crude oil prices and strengthened safe haven demand for the US dollar.Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said escalating attacks around the Strait of Hormuz and in neighbouring countries pushed oil prices higher, while risk off sentiment boosted the US dollar.
He also noted that gold and silver prices were falling amid the current market environment.
Bhansali added that the Reserve Bank of India appeared to be protecting the 92.00 level in the previous session and may continue to do so, although the overall trend for the rupee still appears weak.
Dollar Index and Crude Oil Prices Rise
The dollar index, which measures the strength of the US dollar against a basket of six major currencies, was trading at 99.47, up 0.24 percent.Meanwhile, Brent crude, the global oil benchmark, surged to USD 101.12 per barrel in futures trade, marking a sharp rise of 9.94 percent.
Weak Domestic Equities Add Pressure
The rupee’s decline also coincided with a weak performance in domestic equity markets in the previous session.The BSE Sensex fell by 827.58 points, or 1.08 percent, to settle at 76,036.13, while the NSE Nifty declined by 310.55 points, or 1.13 percent, closing at 23,556.30.
Foreign Investors Continue to Sell
Foreign institutional investors remained net sellers in the equity market. According to exchange data, FIIs sold equities worth Rs 6,267.31 crore on a net basis on Wednesday.The continued outflows from foreign investors added further pressure on the rupee in early trade.
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