A customer holds hundred rupees Indian currency notes near a roadside currency exchange stall.
| Photo Credit: Reuters

The Indian rupee witnessed range-bound trading and settled for the day on a flat note at 83.97 (provisional) against the U.S. dollar on Tuesday (August 13, 2024), as weak domestic markets and a surge in crude oil prices weighed on investor sentiments.

Forex traders said risk aversion in the global markets amid heightened geopolitical tension in the Middle East between Israel and Iran also dented sentiments.

At the Interbank Foreign Exchange Market, the local unit traded in a tight range as it opened at 83.95 and finally settled at 83.97 (provisional) against the American currency, unchanged from its previous close.

On Monday, the rupee settled for the day lower by 2 paise at 83.97 against the American currency. The local unit had slumped 37 paise to settle at an all-time low of 84.09 against the U.S. dollar on August 5.

“We expect the rupee to trade with a slight negative bias on risk aversion in the global markets amid heightened geopolitical tension in the Middle East between Israel and Iran. Rising crude oil prices and weak domestic markets may also weigh on the domestic currency,” said Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas.

However, the mixed-to-weak U.S. dollar amid dovish comments from Fed speakers may support the rupee at lower levels.

“Investors may remain cautious ahead of the U.S. CPI, retail sales, and consumer confidence data from the U.S. this week,” said Mr. Choudhary, adding that the USD-INR spot price is expected to trade in a range of 83.75 to 84.25.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.06% higher at 103.19.

Brent crude, the global oil benchmark, declined 0.27% to $82.08 per barrel.

On the domestic macroeconomic front, the net direct tax collection in the country grew 22.48% to about ₹6.93 lakh crore as of August 11 of this fiscal.

The retail inflation eased to 3.54% with food prices falling after a good monsoon. It was the lowest in the last 5 years and has dipped below RBIs targeted rate of 4%.

However, India’s industrial production slowed to a five-month low of 4.2% in June 2024, mainly due to poor performance of the manufacturing sector, though power and mining sectors continue to perform well, as per official data released on Monday (August 12, 2024).

On the domestic equity market front, Sensex declined 692.89 points, or 0.87%, to 78,956.03 points. The Nifty fell 208.00 points, or 0.85%, to 24,139.00 points.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Monday as they offloaded shares worth Rs 4,680.51 crore, according to exchange data.

Image used for representational purpose only.
| Photo Credit: Reuters

The rupee pared its initial losses and settled for the day on an almost flat note at 83.50 (provisional) against the U.S. dollar on July 4, resisting pressure from elevated crude oil prices.

Forex traders said a positive trend in domestic equities, wherein benchmark indices touched all-time high levels, and significant foreign fund inflows supported the rupee and restricted the fall.

At the interbank foreign exchange market, the local unit opened at 83.52 and hit the intraday high of 83.48 and a low of 83.56 against the American currency during the session.

It finally settled at 83.50 (provisional) against the dollar, 1 paisa lower than its previous close.

On Wednesday, the rupee settled 1 paisa lower at 83.49 against the U.S. dollar.

“We expect the rupee to trade with a slight positive bias on softness in the US dollar amid weak economic data and rise in risk appetite in global markets,” said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.

“However, elevated crude oil prices may limit the gains. Investors may remain cautious ahead of the U.S. non-farm payrolls report tomorrow,” Mr. Choudhary said, adding that $-₹ spot price is expected to trade in a range of ₹83.20 to ₹83.80.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.15% lower at 105.24.

Brent crude futures, the global oil benchmark, were trading 0.47% lower at $86.93 per barrel.

In the domestic equity market, Sensex breached the historic 80,000-mark and Nifty scaled a fresh lifetime high. The 30-share BSE Sensex ended the day 62.87 points, or 0.08%, up at its all-time high of 80,049.67 points. The broader NSE Nifty settled 15.65 points, or 0.06%, higher at a fresh peak of 24,302.15 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Wednesday, as they purchased shares worth ₹5,483.63 crore, according to exchange data.

Meanwhile, according to an official of S&P Global Ratings, a sovereign rating upgrade for India in the next 24 months is possible if the central government is able to prudently manage its finances and bring down the fiscal deficit to 4% of GDP.

S&P Global Ratings Director, Sovereign Ratings, YeeFarn Phua, said the trigger for an upgrade would be the government (Centre + states) deficit falling below 7 per cent of the GDP, and a lot of this would have to be driven by the central government.

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| Photo Credit: Reuters

The rupee appreciated 8 paise to 83.37 against the U.S. dollar in early trade on June 28, supported by a positive trend in domestic equities and foreign fund inflows.

Forex traders said the strength of the American currency in the overseas market and elevated crude oil prices weighed on the local unit and restricted the appreciation bias.

At the interbank foreign exchange market, the local unit opened at 83.42 and gained further ground to trade at 83.37 against the greenback in initial deals, registering an increase of 8 paise from its previous closing level.

On Thursday, the rupee appreciated 12 paise to settle at 83.45 against the U.S. dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.15% at 106.06, ahead of the crucial U.S. inflation reading this evening.

Brent crude futures, the global oil benchmark, were trading 0.47% higher at $86.80 per barrel, as fears of supply disruptions from Russia and the Middle East on continued war offset slowing demand.

On Thursday, there were good inflows taking the rupee higher from Wednesday’s closing level, said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

“Inflows are expected on Friday as well, it being the month-end and quarter-end and could take the rupee higher towards 83.35. Exporters may wait to sell while importers may buy the dips,” Mr. Bhansali added.

In the domestic equity market, the 30-share BSE Sensex advanced 347.48 points, or 0.44%, to 79,590.66 points. The broader NSE Nifty rose 114.55 points, or 114.55%, to 24,159.05 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Thursday, as they purchased shares worth ₹7,658.77 crore, according to exchange data.

Image used for representational purpose. V. Sudershan
| Photo Credit: V. Sudershan

The rupee paused its three-day downward move and settled flat at 83.25 (provisional) against the U.S. dollar on October 27, as the support from positive domestic equities was negated by surging crude oil prices.

Forex traders said the rupee consolidated in a narrow range as selling pressure from foreign equity investors continued to weigh on the Indian currency.

At the interbank foreign exchange market, the local unit opened at 83.24 and traded in a narrow range of 83.22 to 83.25 before settling flat at Thursday’s closing level of 83.25 (provisional) against the greenback.

The rupee has dropped 8 paise against the dollar on Thursday, the third consecutive day of fall. It had declined 4 paise on Monday, followed by a dip of 1 paisa on Wednesday.

Forex markets were closed on Tuesday on account of Dussehra.

According to analysts, the dollar retreated as the U.S. Treasury yields dropped from its record levels after the U.S. GDP data, durable goods sales orders as well as home sales numbers exceeded the estimated growth.

Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the dollar gained on robust economic data from the U.S.

“Dollar may strengthen on safe-haven demand on media reports that the U.S. military struck Iranian targets in Syria.

“However, the rise in risk appetite in global markets may support the rupee at lower levels. Traders may remain cautious ahead of core PCE price index and personal income data from the U.S. USD-INR spot price is expected to trade in a range of ₹82.90 to ₹83.60,” Mr. Choudhary added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.06% lower at 106.54 on Friday.

Global oil price benchmark Brent crude witnessed a sharp rise of 2.39% to $90.03 per barrel.

On the domestic equity market front, Sensex surged 634.65 points or 1.01% to settle at 63,782.80. The Nifty climbed 190.00 points or 1.01% to 19,047.25.

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

Image used for representational purpose only.
| Photo Credit: Reuters

The rupee declined by 20 paise to settle at 83.14 (provisional) against the U.S. dollar on September 25 due to rising crude oil prices and a strong American currency against major rivals overseas.

Subdued equity markets and withdrawal of foreign funds also weighed on the domestic currency, forex traders said.

At the interbank foreign exchange market, the local unit opened weak at 83.04 and traded between a high of 83.04 and a low of 83.15 against the greenback.

It finally settled at 83.14 (provisional) against the dollar, registering a fall of 20 paise from the previous close.

On Friday, the rupee climbed 19 paise to close at 82.94 against the U.S. dollar.

Friday’s gain in the rupee was attributed to JP Morgan’s announcement that it will include Indian government securities in its global bond index starting June 2024, a move which is expected to bring in $25-30 billion of inflows into the Indian debt market.

On the other hand, the dollar strengthened due to an increased month-end demand of the American currency by importers and rising U.S. Treasury yield amid concerns of further interest rate hikes by the U.S. Federal Reserve.

Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said, “Indian rupee declined on Monday on a strong dollar and weak domestic equities. Selling pressure from FIIs also put downside pressure on the rupee. US.. dollar gained on hawkish FOMC last week”.

He said the rupee is likely to trade with a slight negative bias on strong dollar and risk aversion in global markets.

“FII outflows and elevated crude oil prices may put further downside pressure on the domestic currency. However, any intervention by the RBI may support the rupee at lower levels. $/₹spot price is expected to trade in a range of ₹82.75 to ₹83.60,” Mr. Chaudhary said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose by 0.08% to 105.67.

Brent crude futures, the global oil benchmark, advanced 0.45% to $93.69 per barrel.

On the domestic equity market front, the BSE Sensex closed 14.54 points or 0.02% higher at 66,023.69. The broader NSE Nifty settled flat at 19,674.55.

India’s foreign exchange reserves declined by $867 million to $593.037 billion in the week ended September 15, the Reserve Bank said on Friday.

Foreign Institutional Investors (FIIs) were net sellers in the capital market on Friday as they offloaded shares worth ₹1,326.74 crore, according to exchange data.