The RBI is reportedly selling dollars in the foreign exchange market to prevent Rupee from hitting an all-time low.
Indian Rupee Vs US Dollar: The Indian Rupee hit a one-year low of 83.28 against the US dollar on Monday. The development comes amid concerns over rising oil prices. Investors are worried that the ongoing conflict between Israel and Hamas may spread to other countries. The RBI is reportedly selling dollars in the foreign exchange market to prevent Rupee from hitting an all-time low.
While it has consolidated in a narrow range and settled for the day higher by 2 paise at 83.28 (provisional) as Forex traders said positive macroeconomic data supported the rupee while geopolitical tensions, particularly the Israel-Hamas conflict, dented investor sentiments.
The local unit opened at 83.25 against the US dollar at the interbank foreign exchange market and moved in a range of 83.24 to 83.28 in the day trade and the rupee finally settled 2 paise higher at 83.28 (provisional) against the previous close.
Notably, the rupee fell 6 paise to settle at 83.30 against the US dollar on Friday.
Risk aversion in global markets and the surge in crude oil prices put downside pressure on the domestic currency. However, lower than expected WPI and some FII buying on Friday cushioned the downside.
The wholesale price index-based inflation remained in the negative territory for the sixth straight month in September at (-) 0.26 per cent, on easing prices of food articles.
The US dollar eased slightly after the US and its allies tried to step in to contain the Hamas-Israel conflict, which has waned some safe haven demand for the greenback, said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.
“We expect rupee to trade with a slight negative bias as risk aversion in global markets and elevated crude oil prices may keep rupee under pressure. However, ceasefire or truce talks may support rupee,” Choudhary added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.13 per cent to 106.51.
Brent crude futures, the global oil benchmark, declined 0.08 per cent to USD 90.82 per barrel.
On the domestic equity market front, the BSE Sensex closed 115.81 points or 0.17 per cent lower at 66,166.93. The broader NSE Nifty declined 19.30 points or 0.1 per cent to 19,731.75.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday as they purchased shares worth Rs 317.01 crore, according to exchange data.
Meanwhile, the country’s forex reserves dropped by a further USD 2.166 billion to USD 584.742 billion for the week ended October 6, the RBI said on Friday.
India’s forex kitty had gone down by USD 3.794 billion to USD 586.908 billion in the previous week.
(With PTI inputs)