The rupee weakened by 16 paise to close at 86.88 (provisional) against the US dollar on Monday, pressured by substantial foreign fund outflows and a rebound in the US dollar index from its intraday lows.
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Forex traders observed heightened dollar demand from foreign banks, while importers rushed to buy dollars, anticipating further depreciation amid ongoing global uncertainty.
At the interbank foreign exchange market, the rupee opened at 86.70, hitting an intraday high of 86.67 and a low of 86.88, marking a 16-paise drop from its previous close.
On Friday, the rupee had gained 21 paise to settle at 86.71 against the US dollar.
“The rupee declined today due to weak domestic market sentiment and a recovery in the US dollar index from its intraday lows. However, lower crude oil prices and a dip in US treasury yields helped limit losses,” said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, PTI reported.
Traders are expected to watch for signals from upcoming speeches by Federal Open Market Committee (FOMC) members.
“We anticipate the rupee to trade with a negative bias due to weakness in domestic equities and continued FII outflows. The overall strength of the US dollar may also weigh on the local currency. However, a further decline in US treasury yields or intervention by the RBI could offer some support,” Choudhary added.
The dollar index, which tracks the greenback’s performance against a basket of six major currencies, was up 0.14% at 106.85.
Meanwhile, Brent crude, the global oil benchmark, edged up 0.12% to $74.83 per barrel in futures trade.
In the equity markets, the 30-share BSE Sensex added 57.65 points, or 0.08%, to settle at 75,996.86, while the Nifty gained 30.25 points, or 0.13%, to 22,959.50.
Foreign institutional investors (FIIs) net sold equities worth ₹4,294.69 crore on Friday, according to exchange data.
Separately, India’s forex reserves climbed by $7.654 billion to $638.261 billion in the week ended 7 February, the RBI reported. This marks the third straight weekly increase, following a $1.05 billion rise to $630.607 billion in the previous week ended January 31.
(With PTI inputs)
