The Indian rupee weakened by 15 paise on Wednesday, closing at 84.44 (provisional) against the US dollar, driven by uncertainties surrounding US President-elect Donald Trump’s trade policies and a surge in crude oil prices. The rupee opened lower at 84.38 and dipped further to an intra-day low of 84.48 before recovering slightly. It ultimately settled at 84.44, 15 paise lower than Tuesday’s close of 84.29.
The Indian rupee closed at the same level of 84.44, on November 23 gaining six paise from its previous close of 84.50.
Forex traders attributed the rupee’s decline to increased volatility caused by Trump’s aggressive trade policy signals. “The rupee lost the gains it had made earlier in the day and fell to 84.48 before recovering as the Reserve Bank of India intervened by selling dollars.
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Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas said, “USDINR CMP- 84.4150 (spot) Indian Rupee depreciated by 0.12 per cent on Wednesday amid strong Dollar demand from bank on expiry of the futures contract and a recovery in crude oil prices. However, positive tone in domestic markets and weakness in the US Dollar index prevented a sharp fall in the Rupee.”
He added,”We expect Rupee to trade with a negative bias on overall strength in the US Dollar and month end Dollar demand from importers. However, positive domestic markets and fresh FII outflows may support the Rupee at lower levels. “
However, month-end demand led to further dollar purchases, which kept the rupee under pressure,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP. He expects the rupee to trade in the range of 84.30 to 84.55 on Thursday.
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Despite the rupee’s fall, a weakening US dollar against major currencies and strong domestic equity market performance helped limit the depreciation. The dollar index, which tracks the greenback’s strength against a basket of six currencies, was down 0.46 per cent at 106.51.
Brent crude, a global oil benchmark, saw a rise of 0.55%, trading at $73.21 per barrel, adding pressure to the rupee. However, a robust performance in Indian equities provided some support.
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