Title: Indian Rupee Slides as Foreign Fund Outflow Persists Amidst Surging Crude Oil Prices
In the early trading hours on Friday, the Indian rupee witnessed a 5 paise depreciation, reaching 83.18 against the US dollar. Foreign fund outflow and an increase in crude oil prices were identified as key factors contributing to the decline. Additionally, the negative sentiment in the equity market and the strength of the dollar further burdened the Indian currency, forex traders revealed.
The interbank foreign exchange saw the domestic unit begin at 83.17 against the dollar, ultimately hitting a low of 83.20 before settling at 83.18 against the greenback. Consequently, the rupee experienced a loss of 5 paise compared to its previous closing value.
Yesterday, the rupee experienced a modest gain, settling 15 paise higher at 83.13 against the US dollar. Meanwhile, the dollar index, measuring the strength of the US currency against six other currencies, registered a slight rise of 0.03% to 106.28.
Analysts attributed the rupee’s decline to the significant increase in US Treasury yield. Furthermore, Jerome Powell, the Chair of the US Federal Reserve, indicated on Thursday that due to higher-than-expected inflation figures, a prolonged period of monetary tightening might be required.
Anand James, the Chief Market Strategist at Geojit Financial Services, shared his USD-INR outlook, stating that the trading boundaries are now established at 83.07 on the downside and 83.26 on the upside, with 83.20 potentially serving as a turning point for the day.
In the global oil market, Brent crude futures saw a rise of 0.94%, reaching USD 93.25 per barrel. Turning to the domestic equity market, the 30-share BSE Sensex experienced a decline of 161.15 points or 0.25%, settling at 65,468.09. The broader NSE Nifty also saw a decrease of 52.15 points or 0.27%, closing at 19,572.55.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday, selling shares worth Rs 1,093.47 crore, as per exchange data.
As the Indian rupee faces challenges amidst foreign fund outflow and rising oil prices, market observers will closely monitor global developments and economic indicators to assess the impact on the financial landscape in the coming weeks.