Besides, weak equity market sentiment and elevated levels of crude oil prices — hovering above USD 92 a barrel — weighed on the domestic currency, forex traders said
Published Date – 05:25 PM, Tue – 26 September 23
New Delhi: The rupee stayed on the downward track for the second straight day to settle 14 paise lower at 83.27 (provisional) against the US dollar on Tuesday due to a firm greenback against major currencies overseas and persistent foreign capital outflows.
Besides, weak equity market sentiment and elevated levels of crude oil prices — hovering above USD 92 a barrel — weighed on the domestic currency, forex traders said.
At the interbank foreign exchange, the domestic unit opened at 83.19 and traded between a high of 83.17 and a low of 83.27 against the greenback during the day. It finally settled at 83.27 (provisional), registering a fall of 14 paise from its previous close.
On Monday, the rupee declined by 19 paise to close at 83.13 against the dollar.
Analysts attributed the downward movement of the rupee to a strengthening dollar amid weak Asian markets and rising US Treasury yields.
The US dollar surged to a ten-month high level after a Federal Reserve policymaker hinted at a longer interest rate hike due to resilience in the US economy. The 10-year US treasury yields also rose to a 16-year high.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said: “Indian rupee depreciated on Tuesday on a positive tone in US dollar and weak domestic markets. Weak Asian markets and FII outflows also weighed on rupee”.
He said global risk sentiments deteriorated on the renewed housing crisis in China after Evergrande missed a bond repayment. “However, decline in crude oil prices prevented a sharp fall in the domestic currency.” “We expect the rupee to trade with a slight negative bias on risk aversion in global markets amid the rising US dollar and hawkish US Federal Reserve stance. Selling pressure from FIIs may put further downside pressure on the rupee.
However, the decline in crude oil prices may support the rupee at lower levels.
“Traders may take cues from US consumer confidence and new home sales data which is expected weaker than the previous reading. USD/INR spot price is expected to trade in a range of Rs 82.80 to Rs 83.80,” Choudhary added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.06 per cent to 105.94.
Brent crude futures, the global oil benchmark, were trading 0.91 per cent lower at USD 92.44 per barrel.
On the domestic equity market front, the BSE Sensex closed 78.22 points or 0.12 per cent lower at 65,945.47. The broader NSE Nifty slipped 9.85 points or 0.05 per cent to settle at 19,664.70.
Foreign Institutional Investors (FIIs) were net sellers in the capital market on Monday as they offloaded shares worth Rs 2,333.03 crore, according to exchange data.
