The Indian rupee continues to fall amid global uncertainties and continued selling by foreign investors. On Friday, the rupee weakened for the third consecutive trading session, falling 10 paise to 90.44 against the US dollar. A strong dollar and continued outflow of foreign capital kept pressure on the domestic currency. However, softening of crude oil prices and positive trend in the domestic stock market provided some support to the rupee at lower levels.
Trading Overview
The rupee opened at 90.37 against the dollar at the Interbank Foreign Exchange market, but failed to maintain early gains and slipped to 90.44. This is a decline of 10 paise compared to the previous closing price. Earlier on Wednesday, the rupee had closed at 90.34 per dollar. The foreign exchange market was closed on Thursday due to Brihanmumbai Municipal Corporation (BMC) elections.
Why is the rupee falling?
According to foreign exchange market experts, several factors are putting pressure on the rupee:
Heavy selling by foreign institutional investors (FIIs)
global strengthening of dollar
Risk aversion among investors due to geopolitical tensions
The dollar index, which measures the dollar’s strength against six major currencies, fell 0.02 percent to 99.10, but remained elevated.
stock market and crude oil
Mixed trends were seen in the domestic stock market. The Sensex closed 210.04 points higher at 83,592.75, while the Nifty fell 34.65 points at 25,700.25. In the international market, Brent crude fell 0.34 per cent to $63.54 per barrel, providing some relief to the rupee. According to stock market data, FIIs sold shares worth Rs 4,781.24 crore on Wednesday.
Expert opinion
According to Anuj Chaudhary, Research Analyst, Mirae Asset Sharekhan, “The rupee gained some strength in early trade due to possible intervention by the central bank, but the gains were short-lived due to a stronger dollar, outflows by foreign investors and volatility in domestic markets, and the rupee ultimately closed lower.” He further said that “the rupee may remain under pressure due to risk aversion in the global market and increasing geopolitical tensions.” According to Chaudhary, the spot price of rupee against the dollar is likely to trade in the range of 89.95 to 90.50 in the coming session. Overall, due to global instability, outflow of foreign capital and strong dollar, the path of rupee does not seem easy at the moment, although softening of crude oil prices and possible intervention of RBI may limit the fall to some extent.