The rupee fell 6 paise to 83.54 against the US dollar on Thursday, influenced by the overall strength of the American currency in the global market and higher crude oil prices. Forex traders mentioned that the domestic unit encountered resistance due to subdued macroeconomic data.
At the interbank foreign exchange market, the rupee started at 83.52 and then dropped to 83.54 against the US dollar, marking a 6 paise decline from the previous closing level. On the previous day, the rupee gained 11 paise, closing at 83.48 against the US dollar.
The dollar index, which measures the US dollar against a basket of six currencies, was at 104.78, showing a 0.14% increase. Meanwhile, Brent crude futures, the global oil benchmark, decreased by 0.34% to USD 82.32 per barrel.
According to Amit Pabari, Managing Director of CR Forex Advisors, the US Consumer Price Index (CPI) decline, along with the Federal Reserve’s expected rate cut in 2024 and the robust economic fundamentals of India, might lead to negative sentiment for the dollar. Consequently, this could drive the DXY (Dollar Index) towards 103.50, resulting in a stronger rupee. Additionally, the Reserve Bank of India (RBI), with substantial reserves, is prepared to intervene to prevent significant rupee depreciation. Pabari stated, “Considering these factors, the rupee is expected to fluctuate within the range of 82.90 to 83.70.”
On the domestic front, India’s industrial production growth fell to a 3-month low of 5% in April 2024, mainly due to a poor performance by the manufacturing sector. However, the mining and power segments showed good performance, according to official data. Moreover, retail inflation reached a one-year low of 4.75% in May due to a slight decrease in food prices and remained within the Reserve Bank’s target of below 6%, as per government data released on Wednesday.
In the domestic equity market, the 30-share BSE Sensex rose by 306.75 points, or 0.40%, to reach 76,913.32 points. Similarly, the broader NSE Nifty increased by 115.30 points, or 0.49%, to reach 23,438.25 points during early trade. Furthermore, Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Wednesday, purchasing shares worth Rs 426.63 crore, according to exchange data.
