Amid tensions in the Middle East, the Indian rupee is continuously falling. The rupee remains under pressure due to the strengthening US dollar and rise in crude oil prices. On the third trading day of the week—Wednesday—the rupee once again fell by three paise to reach 92.43 against the dollar. The domestic currency is under pressure due to the withdrawal of capital by foreign investors and the strengthening of the US dollar due to the ongoing conflict in West Asia. According to forex traders, a slight softening in global crude oil prices and a positive opening in domestic equity markets have, for now, prevented further losses in the rupee.
Why is the rupee falling?
At the interbank foreign exchange market, the rupee opened at 92.42 against the dollar and then fell to 92.43 per dollar, registering a decline of three paise from its previous closing price. Last week, the rupee had touched a low of 92.47 against the dollar during trading on Thursday. However, it eventually closed at an all-time low of 92.40 per dollar. Meanwhile, the dollar index—which measures the US dollar’s strength against a basket of six major currencies—rose 0.03 percent to 99.60.
In domestic equity markets, Sensex jumped 373.53 points (0.49 per cent) to 76,444.37 in early trade, while Nifty rose 114.40 points (0.49 per cent) to 23,695.55. The price of Brent crude, the international benchmark, fell 1.32 percent to $102.0 a barrel. According to stock market data, foreign institutional investors (FIIs) were net sellers on Tuesday, selling shares worth ₹4,741.22 crore. **What do experts say?** According to Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan, the main reasons for the decline in the domestic currency are the rise in crude oil prices and continuous capital outflow by foreign institutional investors (FIIs). However, improvement in domestic markets and slight weakness in the US dollar have curbed the sharp fall of the rupee to some extent.
He noted that expectations of the reopening of the Strait of Hormuz, as well as possible intervention by the Reserve Bank of India, could support the rupee at lower levels. Apart from this, this week investors will also keep a close eye on the monetary policy decisions of the Federal Open Market Committee (FOMC), European Central Bank (ECB), Bank of Japan and Bank of England. According to him, the spot price of the rupee against the US dollar is likely to remain in the range of ₹92.10 to ₹92.75.