Business

Rupee skids 25 paise to 79.40 against U.S. dollar

The rupee depreciated by 25 paise to close at 79.40 against the U.S. dollar on Thursday, posting its second day of losses amid disappointing macroeconomic data and U.S.-China tensions.

Participants also stayed on the sidelines ahead of the RBI's interest rate decision on Friday, forex traders said.

At the interbank foreign exchange market, the local currency opened at 79.21 and dropped to an intraday low of 79.85. It clawed back some lost ground to finally end at 79.40, down 25 paise over its previous close of 79.15.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.27% to 106.22.

Brent crude futures, the global oil benchmark, advanced 0.69 per cent to $97.45 per barrel.

According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, volatility for the rupee will remain high following increasing tensions between China and U.S. following U.S. House Speaker Nancy Pelosi's visit to Taiwan.

"We expect the USD-INR (spot) to trade sideways and quote in the range of 79.20 and 79.80 in the short-term," Mr. Somaiya added.

On the domestic equity market front, the BSE Sensex ended 51.73 points, or 0.09% lower, to 58,298.80 points, while the broader NSE Nifty fell 6.15 points, or 0.04%, to 17,382.00 points.

Foreign institutional investors remained net buyers in the capital market on Wednesday as they purchased shares worth ₹765.17 crore, as per exchange data.

Forex traders said the rupee is underperforming among Asian currencies amid a record high trade deficit and safe-haven demand for the dollar as investors weigh risks associated with the U.S.-China tensions.

India's exports dipped, though marginally, for the first time in 17 months in July, while the trade deficit tripled to a record $31 billion, fuelled by over a 70% rise in crude oil imports.

"The Indian rupee depreciated for a second straight day and was the worst performing currency among Asian baskets. It managed to pare some intraday losses on probable RBI intervention to curb the volatility as the currency reaches near a record low," said Dilip Parmar, Research Analyst, HDFC Securities.

The rupee has been under immense pressure after a record high trade deficit number and lower reading of services PMI.

"In the near-term, spot USD-INR is expected to trade in the range of 78.70 to 79.90. While the major trend reversal can be seen either below 78.50 or above 80.10," Mr. Parmar added.


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Printable version | Sep 17, 2022 2:53:30 pm | https://www.thehindu.com/business/rupee-skids-25-paise-to-7940-against-us-dollar/article65727209.ece