Indian Rupee falls 8 paise against US dollar

Mumbai: The rupee continued its downward trend for the third consecutive session to close 8 paise lower at 83.25 against the US dollar on Thursday, dragged down by massive selling in equity markets and strengthening American currency overseas.

Withdrawal of foreign funds and elevated crude oil prices touching USD 90 a barrel also weighed on the domestic currency, forex traders said.

At the interbank foreign exchange market, the local unit opened weak at 83.19 and traded between the peak of 83.18 and the lowest level of 83.25 against the greenback.

It finally settled at 83.25 against the dollar, registering a loss of 8 paise from its previous close.

“In today’s session, the rupee struggled by the end of the day amid pressure from persistent equity outflows and elevated US Treasury yields. Taking support from the yields and home sales data, the dollar index climbed to 106.73, the highest in nearly two weeks, which added pressure to USD/INR.

“However, likely US dollar sales from the Reserve Bank of India capped the losses, referring to persistent intervention to prevent the rupee depreciation towards its record low…Meanwhile, during the session, Equity-related outflows also added pressure to the rupee as foreign banks were seen buying dollars, likely for custodial clients,” Rinkle Vira, Fundamental Research Analyst, Anand Rathi Shares and Stock Brokers, said.

This is the third straight fall for the Indian currency. It dropped 4 paise on Monday, followed by a dip of 1 paisa on Wednesday when it settled at 83.17.

Forex markets were closed on Tuesday on account of Dussehra.

Analysts attributed the strengthening dollar to a record rise in the US Treasury yields after positive data on home sales in the US on Wednesday.

Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said a surge in global crude oil prices put pressure on the rupee, but reports of selling of dollars by the RBI cushioned the downside.

“The US dollar gained on safe-haven demand and upbeat economic data from the US. We expect the rupee to trade with a slight negative bias on risk aversion in global markets after risk sentiments deteriorated on fears over an escalation of geopolitical tensions in the Middle East,” Choudhary said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.18 per cent higher at 106.72 on Thursday.

Global oil price benchmark Brent crude declined 0.69 per cent to USD 89.51 per barrel.

On the domestic equity market front, Sensex plunged 900.91 points or 1.41 per cent to settle at 63,148.15. The Nifty tumbled 264.90 points or 1.39 per cent to 18,857.25.

Foreign Institutional Investors sold equities worth Rs 7,702.53 crore on Thursday, according to exchange data.

Choudhary said the USD-INR spot price is likely to trade in a range of Rs 82.90 to Rs 83.60, while traders may take cues from the US macroeconomic data, including quarterly GDP numbers, weekly unemployment claims and durable goods orders.

Jateen Trivedi, VP Research Analyst at LKP Securities, said though the rupee has displayed a degree of strength possibly due to RBI intervention, the overall range for the local unit is anticipated to be between 82.90 and 83.30 in the near term.