Why The Rupee Slipped To 89.95 Despite RBI Support And Rising Forex Reserves
Forex traders said foreign portfolio investors continue to offload Indian equities, which has been weighing on the Indian rupee in the last few months.
The rupee fell 5 paise to 89.95 against the US dollar in early trade on Monday amid foreign fund outflows and a muted opening in the domestic equity markets.
Forex traders said foreign portfolio investors continue to offload Indian equities, which has been weighing on the Indian rupee in the last few months. At the interbank foreign exchange, the local unit opened at 89.95 against the dollar, down 5 paise from its previous close.
On Friday, the rupee depreciated 19 paise to close at 89.90 against the US dollar.
"FPIs flow into Indian equities, a sustained return of foreign buying would be supportive for the rupee in the coming year, which has been the worst-performing currency in the emerging market and Asian markets," said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.02 per cent lower at 98.00.
Brent crude, the global oil benchmark, was trading 0.92 per cent higher at USD 61.20 per barrel in futures trade.
Meanwhile, External Affairs Ministry spokesperson Randhir Jaiswal has said that India and the US remain engaged in concluding a fair, balanced and mutually beneficial bilateral trade agreement.
"This ongoing engagement helps anchor market confidence at a time of global uncertainty," CR Forex Advisors MD Amit Pabari said.
Pabari further said, "The RBI’s presence continues to act as a strong backstop. With spot interventions, liquidity tools and forward market management, the central bank has shown clear intent to prevent disorderly moves in the currency." On the domestic equity market front, the 30-share benchmark index Sensex rose 22.24 points to 85,063.69 in initial trade, while the Nifty was up 18.10 points to 26,060.40.
Foreign institutional investors offloaded equities worth Rs 317.56 crore on Friday, according to exchange data.
Meanwhile, India's forex reserves jumped by USD 4.368 billion to USD 693.318 billion during the week ended December 19, the Reserve Bank said on Friday.
The overall kitty had increased by USD 1.689 billion to USD 688.949 billion in the previous week.
(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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