The Indian rupee faced downward pressure on Tuesday, closing 4 paise lower at 83.43 against the US dollar. The currency was impacted by a robust dollar and soaring crude oil prices, while weak sentiment in domestic equities further weighed on investor confidence.
Starting the day’s trading at 83.37 against the greenback, the rupee oscillated between an intraday high of 83.34 and a low of 83.44 before settling at 83.43, marking a decline of 4 paise over its previous close.
The previous Thursday saw the rupee sliding 6 paise to settle at 83.39 against the US dollar. The forex market remained closed on Friday and Monday due to ‘Good Friday’ and the annual account closing of banks, respectively.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, commented, “We expect the rupee to trade with a slight negative bias on the strength of the US dollar and weak tone in domestic markets. Rising crude oil prices may also weigh on the domestic currency.”
Traders are anticipated to monitor cues from the Job Openings and Labor Turnover Survey (JOLTS) and speeches by various US Federal Reserve officials. Choudhary added that the USD/INR spot price is likely to fluctuate in the range of Rs 83.20 to Rs 83.60.
Meanwhile, the dollar index, which measures the greenback’s performance against a basket of six major currencies, was marginally lower at 104.96.
In the commodities market, Brent crude futures, the global benchmark for oil prices, surged by 1.78% to reach USD 88.98 per barrel, contributing to the concerns over India’s import bill and trade balance.
On the domestic equity front, the Sensex dropped by 110.64 points, or 0.15%, settling at 73,903.91 points, while the Nifty slipped by 8.70 points, or 0.04%, closing at 22,453.30 points.
Foreign institutional investors (FIIs) turned net sellers in the capital markets on Monday, offloading shares worth Rs 522.30 crore, according to exchange data.
Amidst these developments, India’s forex reserves continued their upward trajectory, reaching an all-time high of USD 642.631 billion during the week ended March 22, as confirmed by the Reserve Bank of India. This marked the fifth consecutive week of an increase in reserves.
In domestic economic news, India’s manufacturing sector witnessed robust growth in March, with the HSBC India Manufacturing Purchasing Managers’ Index (PMI) surging to a 16-year high of 59.1, indicating strong demand conditions and significant expansion in output and new orders.
Additionally, GST collections in March grew by 11.5% to Rs 1.78 lakh crore on the back of higher domestic sales, underlining the resilience of the Indian economy amidst global uncertainties.