In response to a strong U.S. dollar abroad, the rupee gave up all of its early gains and depreciated by 3 paise to close at 81.82 (provisional) on Friday. The declining inclination in the rupee was nonetheless restrained, according to forex traders, by the positive attitude on the domestic equity market.
At the interbank foreign exchange, the domestic currency started out at 81.77 against the dollar and ultimately closed at 81.82 (provisional), losing 3 paise from its previous close.
The dollar index, which measures the strength of the dollar against a basket of six different currencies, increased to 102.02, up 0.51 percent. The benchmark for world oil, Brent crude futures, increased 0.45% to USD 78.72 a barrel.
Due to a strong U.S. dollar and rising crude oil costs, the rupee lost value. Anuj Choudhary, a research analyst at Sharekhan by BNP Paribas, noted that strong domestic equities and FII inflows, however, buffered the impact.
The U.S. dollar increased due to the IT sector’s excellent profits and the higher-than-expected US inflation data that were announced on Thursday, which increased hopes for a hawkish Federal Open Market Committee (FOMC).
“Given the increase in risk appetite on international markets and the recent inflows of foreign capital, we anticipate the rupee to trade with a little upward tilt. A strong U.S. dollar, however, might impede a significant upward movement for the rupee, according to Choudhary.
Choudhary stated that “We expect USD/INR spot to trade in between 81.30 to 82.20 in the near-term” and added that traders “may remain cautious” in the wake of India’s fiscal deficit and core PCE deflator from the US.
