The currency finally settled at 82.02 (provisional) against the U.S. dollar on Friday.
| Photo Credit: R. Ragu
The rupee depreciated by 5 paise to close at 82.02 (provisional) against the U.S. dollar on Friday amid strong American currency against major rivals overseas and negative sentiment in equity markets.
Outflow of foreign funds from domestic equities also put pressure on the local unit. However, a sharp fall in crude price cushioned the fall in the Indian currency, said analysts.
“FII outflows also weighed on the domestic currency while the overnight decline in crude oil prices cushioned the downside. The dollar strengthened overnight on hawkish comments by U.S. Federal Reserve Chair Jerome Powell,” said Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas.
At the interbank foreign exchange, the domestic currency opened weak at 82.05 against the greenback. The unit hit the intra-day peak of 82.00 and the lowest level of 82.07 during the day’s trade. The currency finally settled at 82.02 (provisional) against the U.S. dollar, registering a fall of 5 paise over the previous close.
On Thursday, the rupee settled at 81.97 against the dollar.
Mr. Chaudhary said the Indian currency is likely to see more fluctuation in the near term as participants may remain cautious awaiting PMI data from the U.S.
“Strong dollar and concerns over global growth may further pressurise rupee. Most global central banks have hiked interest rates, implying inflation is still a global issue. However, a weakness in crude oil prices may support rupee at lower levels. Traders may remain cautious ahead of PMI U.S. We expect the USDINR spot to trade between 81.50 to 82.40 in the near term,” he added.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was up 0.63% at 103.03.
Crude oil price benchmark Brent crude was down 1.29% to $73.18 per barrel.
In the domestic equity market, the 30-share BSE Sensex declined 259.52 points, or 0.41% to close at 62,979.37, and the broader Nifty fell 105.75 points, or 0.56% to end at 18,665.50.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday as they offloaded shares worth ₹693.28 crore, according to exchange data.