The Indian rupee experienced a decline of 8 paise, reaching a value of 82.74 against the US dollar during early trade on Friday.
This movement was influenced by the strength of the dollar against major global counterparts.
Analysts attribute this depreciation to negative sentiment prevailing in the domestic equity market and the substantial crude oil prices, which were nearing the USD 87 per barrel mark, thereby adding pressure on the domestic currency.
In the latest bi-monthly monetary policy review held on Thursday, the Reserve Bank of India opted to maintain the key interest rate unchanged. However, it hinted at the possibility of adopting a tighter monetary policy if escalating food prices contribute to a rise in inflation. The US dollar saw a resurgence following a moderation in US consumer price inflation during July.
This development raised hopes that the US Federal Reserve might halt its plans for further rate hikes.
In the interbank foreign exchange market, the rupee initially started at 82.75 against the US dollar and maintained a narrow range between 82.73 and 82.76. Ultimately, it settled at 82.74 against the greenback, indicating an 8 paise decrease compared to its previous closing value.
On the preceding day, the rupee rebounded, gaining 19 paise to conclude at 82.66 against the US dollar. This increase followed the Reserve Bank of India’s directive for banks to allocate a larger portion of incremental deposits as part of the cash reserve ratio (CRR) measures, aimed at reducing excess liquidity in the banking system.
In the global scenario, the dollar index, which gauges the US dollar’s strength against a selection of six currencies, registered a 0.05% growth, reaching 102.57. Simultaneously, the Brent crude, a significant global oil benchmark, experienced a minor 0.02% drop, settling at USD 86.38 per barrel.
Within the domestic equity market, the 30-share BSE Sensex exhibited a decline of 229.33 points or 0.35%, reaching 65,458.85. The broader NSE Nifty also encountered a decrease, dropping by 76.05 points or 0.39% to settle at 19,467.05. Foreign Institutional Investors (FIIs) displayed a positive trend in the capital markets on the previous day, recording net purchases of shares amounting to Rs 331.22 crore, as per data from the exchanges.
