Sunday, July 21, 2024

Rupee falls 5 paise to 83.54 against U.S. dollar in early trade

Image for representation only

Image for representation only
| Photo Credit: Reuters

The rupee depreciated 5 paise to 83.54 against the U.S. dollar in early trade on Thursday, weighed down by 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 rupee opened at 83.52 and lost further ground to trade at 83.54 against the greenback in initial deals, registering a fall of 5 paise from its previous closing level.

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

“Though the equity markets are shining bright, the Indian rupee has been trading flat to weaker, despite a drop in the dollar towards 105.04 and US 10-year yields touching 4.35 per cent, post the US service PMI data and ADP non-farm employment change data were weaker than expected,” CR Forex Advisors MD Amit Pabari said.

According to Pabari, crude oil prices have risen nearing USD 87 per barrel and this acted as a counterweight, limiting the rupee’s gains.

“However, stronger fundamentals, robust inflows, and equity markets at an all-time high are clashing with temporary external pressures. As these external factors dissipate, the Indian Rupee is poised to gain strength,” Pabari added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was at 105.36.

Brent crude futures, the global oil benchmark, declined 0.55 per cent to USD 86.86 per barrel.

In the domestic equity market, Sensex breached the historic 80,000-mark and Nifty scaled fresh lifetime highs in early trade. The BSE Sensex was trading 224.79 points, or 0.28 per cent higher at 80,211.59 points. The broader NSE Nifty advanced 67.80 points, or 0.28 per cent, to 24,354.30 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Wednesday, as they purchased shares worth Rs 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 per cent of GDP.

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

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