In response to lower trade deficit figures for the month of January, the rupee partially recovered from its initial losses on Wednesday to settle lower by 4 paise at 82.82 (provisional). Forex traders claimed that the appreciating bias was curbed by a stronger American dollar in foreign exchange markets. The rupee opened lower at 82.90 to the dollar on the interbank foreign currency market amid early losses in local markets.
The local unit lost 4 paise from its previous closing of 82.78 but gained some ground later in the day in line with stocks to close at 82.82 (provisional). The native currency experienced an intraday top of 82.79 and a low of 82.90 against the US dollar during the day. Anuj Choudhary, a research analyst at Sharekhan by BNP Paribas, claims that positive trade deficit statistics caused the rupee to recover from prior losses. As imports plummeted 3.63 percent year over year to USD 50.66 billion in January, India’s trade imbalance reached a 12-month low of USD 17.75 billion.
When compared to January of last year, exports fell 6.58 percent to USD 32.91 billion. The dollar index, which measures the value of the dollar against a basket of six different currencies, was trading 0.21% higher at 103.45. The CPI data from the US showed a print of 6.4% in January, above predictions of 6.2% but somewhat below the print of 6.5% in December, implying sticky inflation may maintain interest rates at higher levels for longer, according to Choudhary.Benchmark Brent crude futures for world oil fell 1.22% to USD 84.54 per barrel.
“We anticipate that the rupee would trade with a negative bias due to the dollar index’s gain, expectations for strong economic data, and worries about the Fed’s aggressive stance. The rupee may be supported at lower levels, though, by a decreasing trade deficit and FII inflows, Choudhary suggested. The broad NSE Nifty increased 86.00 points or 0.48 percent to 18,015.85 while the 30-share BSE Sensex finished 242.83 points or 0.40 percent higher at 61,275.09. According to exchange data, foreign institutional investors (FIIs) were net purchasers on Tuesday in the capital markets, buying shares worth Rs 1,305.30 crore.