Rupee depreciated by 37 paise to close at 85.96 (provisional) against the US dollar on Thursday, pressured by strong dollar demand from importers and foreign banks, along with a surge in crude oil prices.
Forex traders highlighted that surging US bond yields are unsettling global investors. “Moreover, the narrowing yield differential between India and the US is making Indian assets less attractive,” they noted.
Elevated crude oil prices, driven by rising geopolitical tensions in the Middle East, further dampened investor sentiment.
At the interbank foreign exchange market, the rupee opened at 85.59, touched an intra-day high of 85.58, and fell to a low of 86.11 against the US dollar. The domestic currency ended the day lower by 37 paise from its previous close of 85.59 on Wednesday. Over the last three trading sessions, the rupee has declined 54 paise.
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“The Indian rupee has ebbed for a third straight session, influenced by importers’ appetite for the dollar and the unwinding of short positions after a key technical level was breached,” said Dilip Parmar, Senior Research Analyst, HDFC Securities. Parmar added, “A prevailing inclination towards risk aversion, alongside carry trades involving the Japanese yen, additionally exerted downward pressure on the domestic rupee.”
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, rose 0.25 per cent to 99.80. Brent crude, the global oil benchmark, declined 1.45 per cent to USD 63.97 per barrel in futures trade.
Parmar explained, “The spot USDINR rate has retraced to its 100-day simple moving average in today’s session. Advancement beyond the 86.11 threshold might propel it into the 86.30 to 86.45 spectrum. Conversely, the 85.60 mark now acts as a prospective support.”
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Stock markets tumble
Thursday saw sharp declines on Dalal Street as benchmark indices closed significantly lower amid heightened selling pressure triggered by weak global cues. The S&P BSE Sensex plunged 644.64 points to settle at 80,951.99, while the NSE Nifty50 dropped 203.75 points to close at 24,609.70.
Despite a strong session on Wednesday, bears dominated most of Thursday’s trading as profit booking picked up in several key sectors after recent rallies. Global uncertainties, coupled with anticipation around upcoming earnings and macroeconomic data, kept investors cautious.
Foreign institutional investors (FIIs) were net buyers on Wednesday, purchasing equities worth Rs 2,201.79 crore.
(With inputs from PTI)
