Foreign fund outflows and losses in local equities, however, restricted the rupee’s gains, forex dealers said.
Published Date – 09:11 PM, Thu – 28 September 23
Mumbai: The rupee edged up 3 paise to settle at 83.19 against the US currency in a restricted trade on Thursday, aided by a correction in crude oil prices and the greenback.
Foreign fund outflows and losses in local equities, however, restricted the rupee’s gains, forex dealers said.
The rupee opened flat at 83.22 against the US dollar and later moved in a range of 83.25 to 83.13 in day trading.
The local unit settled at 83.19 against the US dollar, up by 3 paise over the previous close. The rupee had closed at 83.22 on Wednesday after a listless trade.
India’s current account deficit narrowed to USD 9.2 billion or 1.1 per cent of GDP for the April-June period, the Reserve Bank said on Thursday.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, declined by 0.47 per cent to 106.17 after touching a nearly 10-month high of 106.84 in overnight trade.
“The dollar experienced a slight dip, which provided some support to the rupee. Despite recent rallies in the dollar and crude oil prices, the rupee appears to have avoided a significant decline for the time being,” Jateen Trivedi, VP Research Analyst at LKP Securities said.
“The rupee traded within a narrow range between 83.12 and 83.22. This stability comes in the wake of a significant development related to India’s current account deficit (CAD).
“The CAD in India has decreased, dropping from USD 17.9 billion (2.1 per cent of GDP) in Q1 of 2022-23 to USD 9.2 billion (1.1 per cent of GDP) in Q1 of 2023–24,” Trivedi said.
Brent crude, the global oil benchmark, also retreated 0.57 per cent to USD 96 per barrel.
Analysts said the combination of higher interest rates and US bond yields are influencing FIIs to stay in the selling mode in Indian capital markets, which is weighing on the local currency.
On the domestic equity front, the 30-share BSE Sensex fell 610.37 points or 0.92 per cent to settle at 65,508.32. The broader Nifty declined 192.90 points or 0.98 per cent to end at 19,523.55.
Foreign Institutional Investors (FIIs) were net sellers in the capital market on Thursday as they offloaded shares worth Rs 3,364.22 crore, according to exchange data.
