The Indian rupee edged lower by 3 paise to settle at 82.92 against the US dollar on Wednesday, a move attributed to cautious market sentiment amidst bearish equity markets and foreign fund outflows. Increased month-end demand for the greenback also contributed to the rupee’s decline, although softer crude oil prices offered some support to the domestic currency.
Forex analysts highlighted that while the rupee faced pressure from a stronger dollar, the impact was mitigated by the easing of crude oil prices. Market participants remained on the sidelines ahead of key economic data releases, including domestic GDP figures scheduled for Thursday and US GDP numbers expected on Wednesday.
Opening at 82.90 against the US dollar, the rupee touched an intraday low of 82.95 before settling at 82.92, marking a marginal loss of 3 paise compared to its previous close. Tuesday saw the rupee ending 1 paisa lower at 82.89 against the greenback.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, observed that weak domestic markets and a strong US dollar contributed to the rupee’s decline, albeit cushioned by declining crude oil prices. Looking ahead, Choudhary expects the rupee to trade with a slight negative bias, influenced by global equities and month-end dollar demand from importers and oil marketing companies.
The dollar index, which measures the strength of the greenback against a basket of six major currencies, rose by 0.37% to 104.21. Meanwhile, Brent crude futures, the global oil benchmark, dipped by 0.92% to USD 82.88 per barrel, providing some respite to the Indian economy.
In the domestic equity markets, the Sensex plummeted by 790.34 points, or 1.08%, to settle at 72,304.88 points, while the Nifty witnessed a decline of 247.20 points, or 1.11%, closing at 21,951.15 points. Foreign institutional investors (FIIs) turned net sellers on Tuesday, offloading shares worth Rs 1,509.16 crore on a net basis, as per exchange data.
As market participants await further economic indicators and global cues, the trajectory of the rupee against the dollar remains subject to ongoing market dynamics and external factors influencing currency movements.