On Tuesday, the Indian rupee experienced a 15 paise depreciation to conclude at 83.21 (provisional) against the US dollar. This decline was attributed to a robust US dollar and a lackluster performance in the domestic stock markets, which adversely affected investor sentiments. Forex traders noted that subdued domestic macroeconomic data and sustained outflows of foreign institutional investments (FIIs) also added downward pressure on the rupee.
In the interbank foreign exchange market, the rupee commenced trading at 83.21 against the US dollar and fluctuated within a range of 83.23 to 83.17. Ultimately, the rupee settled at 83.21 (provisional), marking a 15 paise drop from its previous close. Notably, the rupee had appreciated by 13 paise to reach 83.06 against the US dollar on the preceding Friday. On Monday, the domestic forex market had remained closed in observance of Mahatma Gandhi Jayanti.
Meanwhile, the dollar index, which gauges the strength of the US dollar against a basket of six major currencies, saw a 0.14% increase, reaching 104.05. In the global oil market, Brent crude futures, the benchmark for global oil prices, exhibited a marginal decline of 0.02% to reach USD 90.69 per barrel.
Analysts anticipate that the rupee may continue to experience a negative bias due to hawkish comments from the Federal Reserve (Fed) and the prevailing strength of the US dollar. Additionally, concerns related to risk aversion in global markets could further weigh on the Indian currency. However, a potential decline in crude oil prices and potential dollar sales by the Reserve Bank of India (RBI) might offer some support to the rupee at lower levels. Forex traders are likely to monitor data such as JOLTS job openings from the US and exercise caution ahead of the RBI’s upcoming monetary policy meeting.
Regarding the domestic equity markets, the BSE Sensex, a benchmark stock index, concluded the trading session with a 316.31-point or 0.48% decline, settling at 65,512.10. Likewise, the broader NSE Nifty recorded a decrease of 109.55 points or 0.56%, closing at 19,528.75.
Foreign Institutional Investors (FIIs) were net sellers in the Indian capital market on the preceding Friday, as they divested shares valued at Rs 1,685.70 crore, as per exchange data. A monthly survey revealed that manufacturing activities in India contracted to a five-month low in September, primarily due to a softer increase in new orders, which tempered production growth. The S&P Global India Manufacturing Purchasing Managers’ Index (PMI) decreased to 57.5 in September from 58.6 in August, marking its lowest level in five months.
In summary, the rupee faced depreciation pressures on account of a strong US dollar, subdued domestic equities, and other economic factors, while traders remain watchful of both global and domestic developments that may impact the currency’s performance.