The Indian rupee faced a setback on Monday, depreciating by 8 paise to settle at 83.06 (provisional) against the US dollar. The decline was attributed to the strengthening American currency in the global market and a prevailing negative sentiment in the domestic equity markets. However, the rupee found support in the downward trend of global crude oil prices, which helped mitigate its overall decline, according to forex traders.
Opening at 83.03 against the dollar at the interbank foreign exchange, the rupee traded in a narrow range of 83.00 to 83.07 throughout the day. The local unit finally settled at 83.06 against the greenback, marking an 8 paise decrease from its previous close. The rupee had maintained stability on Friday, settling flat at 82.98 against the dollar.
The dollar index, which measures the strength of the greenback against a basket of six currencies, recorded a 0.33% increase, reaching 104.12. Analysts noted that the US dollar gained strength following steady growth in the world’s largest economy. Investors are closely monitoring the Reserve Bank of India’s (RBI) upcoming monetary policy decision, scheduled to be announced later this week.
While the negative sentiment in domestic equity markets persisted, the rupee found some relief in the declining trend of global crude oil prices. Brent crude futures, a global oil benchmark, dipped by 0.14% to $77.22 per barrel.
On the domestic equity front, the Sensex experienced a decline of 354.21 points, or 0.49%, closing at 71,731.42 points. The Nifty also saw a dip of 82.10 points, or 0.38%, settling at 21,771.70 points.
In contrast to the challenging economic indicators, a monthly survey released on Monday brought positive news for India’s services sector. The HSBC India Services PMI Business Activity Index rose to 61.8 in January, marking a six-month high and demonstrating accelerated growth in new business. The buoyant demand was observed both domestically and externally.
Foreign Institutional Investors (FIIs) acted as net buyers in the capital markets on Friday, investing in shares worth Rs 70.69 crore, according to exchange data. Additionally, India’s forex reserves witnessed an increase of $591 million, reaching $616.733 billion for the week ending January 26, as reported by the Reserve Bank of India (RBI) on Friday.
Despite the current challenges, the resilience of India’s economic indicators and ongoing market activities continue to shape the narrative of the country’s financial landscape. Investors remain watchful of both global and domestic factors influencing the rupee’s trajectory in the coming days.
