The Indian rupee dropped by 3 paise to 84.83 against the US dollar on Monday, reflecting the weak performance of domestic equities and rising crude oil prices. Forex traders highlight persistent dollar demand as a key factor in the rupee's decline.
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The Indian rupee weakened by 3 paise to 84.83 against the US dollar in early trading on Monday, driven by a muted trend in domestic equities and rising crude oil prices.
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Forex traders noted that the rupee continues to be under pressure due to persistent dollar demand from importers and foreign banks. At the interbank foreign exchange market, the rupee opened at 84.83, marking a 3 paise drop from its previous close of 84.80.
On Friday, the rupee had recovered from its all-time low, closing with a gain of 8 paise at 84.80 against the greenback. However, in the past week, the Indian currency saw depreciation after the Reserve Bank of India (RBI) announced a leadership transition. Despite this, the RBI has remained vigilant, monitoring banking system liquidity closely and using buy-sell swaps to provide support to the rupee.
Experts suggest that the weakening rupee trend is primarily driven by the demand for dollars. Amit Pabari, Managing Director of CR Forex Advisors, mentioned that Foreign Institutional Investors (FIIs) have turned net buyers in December, following large outflows in previous months, and this could lend further stability to the domestic currency. According to exchange data, FIIs bought Rs 2,335.32 crore worth of equities on a net basis on Friday.
Meanwhile, the dollar index, which measures the greenback's strength against a basket of six major currencies, was trading lower by 0.13 per cent at 106.86. Additionally, Brent crude, the global oil benchmark, dropped by 0.34 per cent to USD 74.24 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex was down by 78.29 points or 0.10 per cent, trading at 82,054.83 points in the morning session. Similarly, the Nifty index fell by 15.45 points or 0.06 per cent, settling at 24,752.85 points.
As per the latest data from the RBI, India's foreign exchange reserves declined by USD 3.235 billion to USD 654.857 billion for the week ended December 6. In the previous week, the reserves had increased by USD 1.51 billion to USD 658.091 billion, following a period of decline. PTI reports.
(With inputs from PTI)
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