Indian rupee depreciated 9 paise to 79.03 against U.S. dollar in early trade

The rupee depreciated 9 paise to 79.03 against the U.S. dollar in opening trade today, as consistent foreign funds outflows weighed on investor sentiments. Forex traders said the weakness of crude oil prices is supporting the local unit. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was at 105.14. Global oil benchmark Brent crude futures declined 0.08 percent to USD 111.54 per barrel.

However, inflation and growth worries in India and globally could cap the appreciation bias, they added. At the interbank foreign exchange, the rupee opened at 78.97 against the U.S. dollar, then fell to a price of 79.03, registering a decline of 9 paise over the previous close.

In the previous session on Friday, the rupee had closed at 78.94 against the U.S. dollar. “Today is a U.S. holiday therefore cash demand of USD will be absent. Maybe we could see some lower levels towards 78.80 for the pair. Importers should take advantage of the dips and buy their next 10-15 days of exposures and exporters could sell the upticks towards 79.20 for near-term exposures,” said Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors.

The dollar index edged higher as policymakers promised further quick interest rate hikes. Federal Reserve policymakers on Tuesday promised further quick interest rate hikes to bring down high inflation but pushed back against growing fears among investors and economists that sharply higher borrowing costs will trigger a deep downturn. Further, the dollar was supported by hawkish comments from Jerome Powell.

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