Rupee Declines 10 Paise Amid Strong Dollar and Geopolitical Concerns, Overlooking Positive Signals
Rupee began the week on a weaker note, slipping 10 paise to 95.28 against the US dollar in early trade. The decline was attributed to a stronger dollar overseas and ongoing uncertainty over global developments. The rupee opened at 95.25 in the interbank foreign exchange market before weakening to 95.28, down from Friday’s close of 95.18.
Forex traders noted that the Reserve Bank of India is likely to utilize any new foreign inflows to bolster the country’s foreign exchange reserves instead of allowing the rupee to appreciate significantly. Market sentiment remained cautious due to geopolitical risks, particularly concerning the progress of US-Iran peace talks.
According to Amit Pabari, Managing Director of CR Forex Advisors, the rupee’s failure to strengthen despite favorable global cues indicates underlying weakness. He stated that the inability of the rupee to rally on positive news, such as falling oil prices and a softer dollar, reflects a fragile market mood. Pabari warned that any negative triggers could push the USD/INR towards the 95.80 to 96.00 range, with support near 94.80 to 95.00.
The dollar index, which measures the US currency against six major peers, was trading 0.10% higher at 100.95. Pabari mentioned that while weak US jobs data had exerted pressure on the dollar index, the rupee did not benefit from the softer greenback. He noted that typically, a weaker dollar would provide the rupee with some relief, but this time it did not occur.
Brent crude futures, the global benchmark for oil prices, were down 0.58% at $71.70 a barrel. Meanwhile, Indian equity markets started the week positively, with the benchmark indices rising over 0.4% in early trade. The BSE Sensex climbed 316.46 points, or 0.41%, to 78,080.37, while the NSE Nifty advanced 99.60 points, or 0.41%, to 24,381.00.
Exchange data indicated that foreign institutional investors were net buyers on Friday, purchasing equities worth Rs 1,355.33 crore. Separately, the Reserve Bank of India reported that the country’s foreign exchange reserves declined by $5.654 billion to $666.933 billion in the week ended June 26. This followed an increase of $963 million in the previous week, when reserves had risen to $672.587 billion.
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