Rupee fell 5 paise to 83.54 against the US dollar in early trade

Rupee fell 5 paise to 83.54 against the US dollar in early trade

Image for representation only

Image for representation only | Photo Credit: Reuters

The rupee weakened by 5 paise to 83.54 against the US dollar in early trade on Thursday due to rise in crude oil prices.

Forex traders said the rupee got support due to a positive trend in the domestic equity markets and the decline was capped. Benchmark indices in the domestic stock markets touched all-time highs and there was substantial inflow of foreign capital.

The rupee opened at 83.52 at the interbank foreign exchange market and fell to 83.54 against the dollar in early trade, showing a decline of 5 paise from its previous close.

On Wednesday, the rupee declined by 1 paisa to close at 83.49 against the US dollar.

“Although the stock market is in a rally, the Indian rupee is trading stable to weak despite the dollar hitting a high of 105.04 and the US 10-year interest rate hitting 4.35 per cent,” said Amit Pabari, managing director, CR Forex Advisors.

According to Pabari, crude oil prices have risen to around $87 a barrel and this has acted as a counterbalance, limiting the rupee's gains.

“However, strong fundamentals, robust investment flows and equity markets at all-time highs are offsetting temporary external pressures. The Indian rupee is set to strengthen once these external factors abate,” Pabari said.

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

Brent crude futures, the global oil benchmark, fell 0.55 per cent to $86.86 per barrel.

In the early trade of the domestic stock market, the Sensex crossed the historic 80,000 mark and the Nifty touched a new record level. The BSE Sensex was trading at 80,211.59 points, up 224.79 points or 0.28 percent. The NSE Nifty rose 67.80 points or 0.28 percent to reach 24,354.30 points.

Foreign institutional investors (FIIs) were net buyers in the capital market 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, if the central government is able to manage its finances prudently and bring down the fiscal deficit to 4 per cent of GDP, India's sovereign rating is possible to improve in the next 24 months.

Yiphern Phua, director, sovereign ratings, S&P Global Ratings, said the trigger for an upgrade would be bringing the government (central and state) deficit below 7% of GDP, and much of this would be driven by the central government.

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