Rupee Hits Fresh Low Amid Importer Demand, Trade Deal Uncertainty Looms
Forex traders said after breaching the crucial 86 level, the rupee continued its decline, which intensified the downward trend, tracking a strengthening dollar index.
The rupee depreciated 14 paise to close at 86.30 (provisional) against the US dollar on Monday due to consistent dollar demand from oil importers.
Forex traders said after breaching the crucial 86 level, the rupee continued its decline, which intensified the downward trend, tracking a strengthening dollar index.
At the interbank foreign exchange, the domestic unit opened at 86.27 against the greenback and touched an intra-day high of 86.19 and a low of 86.36 against the greenback.
At the end of Monday's trading session, the local unit settled at 86.30, down 14 paise over its previous closing price.
On Friday, the rupee settled 4 paise lower at 86.16 against the US dollar.
Forex traders said all eyes are now on the outcome of India-US trade talks, especially as the August 1 deadline for potential tariffs on Indian exports draws closer. If the discussions fail or get delayed, it would add to the rupee's challenges, and if a deal is reached, it could offer a much-needed breather.
The uncertainty around the India-US trade deal is likely to keep market participants cautious, they added.
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Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.22 per cent to 98.26.
Brent crude, the global oil benchmark, fell 0.48 per cent to USD 68.95 per barrel in futures trade.
"The Indian rupee has experienced considerable weakness in recent days and remains the weakest among Asian currencies.
"The primary catalysts for this decline are consistent dollar demand from the importers and a continued exodus of foreign capital. On the technical front, the spot USD/INR has immediate resistance at 86.65 and a significant support at 85.80," said Dilip Parmar, Research Analyst, HDFC Securities.
In the domestic equity market, the 30-share BSE Sensex advanced 442.61 points, or 0.54 per cent, to 82,200.34, while the Nifty rose 122.30 points, or 0.49 per cent, to 25,090.70.
Foreign institutional investors (FIIs) purchased equities worth Rs 374.74 crore on a net basis on Friday, according to exchange data.
(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
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