In a day marked by fluctuating market sentiments, the Indian rupee depreciated by 4 paise to settle at 82.88 (provisional) against the US dollar on Friday. The currency’s decline was attributed to continued foreign fund outflows and a negative trajectory in domestic equities.
Forex traders observed that the rupee faced headwinds from a stronger American currency on the global front, coupled with elevated crude oil prices in the international market. At the interbank foreign exchange market, the rupee commenced trading at 82.95, reaching an intraday low of 82.96 and a high of 82.85 against the greenback before concluding the day at 82.88 (provisional), registering a loss of 4 paise from its previous close.
On Thursday, the rupee had depreciated by 3 paise to settle at 82.84 against the US dollar. Concurrently, the dollar index, a measure of the greenback’s strength against a basket of six currencies, exhibited a marginal decline of 0.05% to 103.31 following hotter-than-expected inflation data from the US.
In the energy markets, Brent crude futures, the global oil benchmark, witnessed a modest decline of 0.50% to USD 84.99 per barrel, adding to the market’s cautious sentiment.
Analysts at Sharekhan by BNP Paribas anticipated the rupee to maintain a slight negative bias amidst the backdrop of a robust dollar and weak global markets. However, they also noted that potential easing of crude oil prices and potential interventions by the Reserve Bank of India (RBI) could provide some support to the rupee.
Traders remained attentive to various economic indicators, including India’s trade balance data and industrial production figures from the US, which could influence market movements in the near term.
Domestically, the equity market witnessed a decline, with the Sensex shedding 453.85 points, or 0.62%, to settle at 72,643.43, while the Nifty closed lower by 123.30 points, or 0.56%, at 22,023.35.
Foreign Institutional Investors (FIIs) continued to be net sellers in the capital markets on Thursday, offloading shares worth Rs 1,356.29 crore, according to exchange data. Meanwhile, on the macroeconomic front, India’s wholesale inflation rate marginally declined to 0.2% in February, despite a slight uptick in the food basket, reflecting the complex economic landscape influencing market dynamics.