The rupee declined by 31 paise to close at 79.87 against the U.S. currency on Friday due to a strong dollar demand from importers and losses in Asian peers.
A rebound in crude oil prices also put pressure on the local unit.
At the interbank foreign exchange market, the domestic currency opened lower at 79.63 per dollar. It hovered in a range of 79.61 to 79.83 during the session.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.33% lower at 109.32.
Brent crude futures, the global oil benchmark, rose by 2.10% to $94.30 per barrel ahead of the meeting of oil cartel OPEC and other producers which are likely to discuss output cuts.
“Taking cues from the regional currencies, the rupee depreciated against the American dollar. The risk-off moods and higher crude oil prices also weighed on the local unit,” said Dilip Parmar, Research Analyst, HDFC Securities.
Mr. Parmar further said that technically, spot USDINR back above the short-term moving averages while the oscillators remained sideways indicating range-bound trades in the near term. The pair is having resistance at 80.13 and support at 79.20.
“We expect the Rupee to remain weak compared to the U.S. Dollar on concerns over fresh COVID-19 lockdown in parts of China. Concerns over global economic slowdown and overall strength in Dollar may also put downside pressure on Rupee,” said Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas.
According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the Indian rupee ended weak due to expectations that the U.S. Fed will continue to call for aggressive monetary policy stance.
Most Asian and emerging market peers were weak ahead of the crucial US nonfarm payroll number, while a recovery in the crude oil also weighed on the sentiment.
On the domestic equity market front, key stock indices closed almost flat in a volatile trade. The BSE Sensex ended 36.74 points or 0.06% higher at 58,803.33 while the broader NSE Nifty declined 3.35 points or 0.02% to 17,539.45.
Foreign institutional investors turned net sellers in the capital market on Thursday as they offloaded shares worth ₹2,290.31 crore, as per exchange data.
