In early trading on Tuesday, the Indian rupee weakened by 9 paise to reach 83.53 against the US dollar, driven by the strength of the American currency and escalating crude oil prices amidst tensions between Iran and Israel.
Forex analysts noted a negative sentiment in domestic equities and ongoing foreign fund outflows, which contributed to the rupee’s decline.
Opening at 83.51 against the dollar, the rupee touched a low of 83.53 during the initial trading session, marking a 9 paise decrease from its previous close. On Monday, the rupee had slipped by 6 paise to settle at 83.44 against the US dollar.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, attributed the rupee’s further decline to foreign portfolio investors’ continued preference for the dollar amidst heightened Middle East tensions and rising US yields. Bhansali also emphasized the importance of monitoring the Reserve Bank of India’s response to address rupee depreciation.
Meanwhile, the dollar index, which measures the dollar’s performance against a basket of six major currencies, stood at 106.34, reflecting a 0.13 percent increase.
Brent crude futures, the global oil benchmark, climbed 0.53 percent to reach USD 90.58 per barrel, as Israel deliberated its response to the Iran attack amid escalating tensions in the Middle East.
On the domestic front, the BSE Sensex was trading lower by 307.44 points, or 0.42 percent, at 73,092.34 points, while the broader NSE Nifty fell by 76.50 points, or 0.34 percent, to 22,196.00 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday, offloading shares worth ₹3,268.00 crore, according to exchange data.
Additionally, wholesale inflation in India increased marginally to a three-month high of 0.53 percent in March compared to 0.20 percent in the previous month, primarily due to rising prices of vegetables, potato, onion, and crude oil. Furthermore, India’s merchandise exports witnessed a slight decline in March to USD 41.69 billion, and a 3.11 percent decrease during the last fiscal year to USD 437.06 billion, largely attributed to ongoing geopolitical tensions and subdued global trade.
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