The Indian rupee witnessed a significant depreciation on Friday, falling by 35 paise to settle at an all-time low of 83.48 against the U.S. dollar. This decline came in response to a strengthening greenback against major currencies in international markets, coupled with weakness observed in Asian currencies. Additionally, foreign fund outflows further exacerbated the downward pressure on the local currency.
At the onset of trading in the interbank foreign exchange market, the rupee opened weakly at 83.28 against the U.S. dollar. Throughout the trading session, it struggled to maintain stability, ultimately settling at the historic low of 83.48. In intraday trade, the rupee even touched a low of 83.52 against the American currency. This marks a notable fall of 35 paise from the previous close of 83.13. The rupee’s previous lowest closing level was recorded at 83.40 on December 13, 2023.
Analysts attributed the strength of the U.S. dollar to various factors influencing global markets. The euro weakened following a surprise interest rate cut by the Swiss National Bank (SNB), heightening expectations of a similar move by the European Central Bank (ECB) in June 2024. Similarly, the British pound faced downward pressure after the Bank of England opted to maintain its interest rates at 5.25%, with two hawkish committee members favoring a no rate hike despite previous inclinations towards an increase.
Furthermore, robust economic data from the United States contributed to the dollar’s strength, amplifying its appeal to investors. The dollar index, which measures the greenback’s performance against a basket of six major currencies, exhibited a 0.31% increase to reach 104.32 on Friday.
In the realm of commodities, Brent crude futures, the global oil benchmark, experienced a slight decline, dropping to USD 85.74 per barrel. This decline, albeit marginal, contributed to the broader economic landscape influencing currency movements.
Looking ahead, analysts anticipate the rupee to continue trading with a negative bias, primarily driven by the robust performance of the U.S. dollar and expectations of a potential rebound in crude oil prices. However, domestic market sentiments and potential interventions by the Reserve Bank of India (RBI) could offer some support to the rupee at lower levels.
Amidst these currency fluctuations, the domestic equity market demonstrated resilience, with the BSE Sensex closing 190.75 points or 0.26% higher at 72,831.94. Similarly, the NSE Nifty witnessed an increase of 84.80 points or 0.39% to settle at 22,096.75.
Foreign Institutional Investors (FIIs) remained net sellers in the capital market on Thursday, offloading shares worth Rs 1,826.97 crore, as per exchange data. This trend further underscored the prevailing uncertainties influencing investor behavior in both currency and equity markets.
