The Indian rupee weakened by 14 paise to 81.92 against the US dollar in early trade on Tuesday, following the strength of the US currency in the global market. Despite significant foreign fund inflows and positive domestic equities, the local currency depreciated against the dollar. The rupee began the day at 81.84 against the dollar at the interbank foreign exchange, but its value fell to 81.92, marking a decline of 14 paise compared to its last close. The previous day, the rupee had settled at 81.78 against the dollar.
Forex traders attributed the depreciation of the rupee to the rise in the dollar index, which measures the strength of the greenback against a basket of six currencies. The index rose by 0.07% to 101.44. Meanwhile, the global oil benchmark, Brent crude futures, decreased by 0.40% to USD 76.70 per barrel. The US inflation data, due the following day, could clarify the Federal Reserve’s approach to curb inflation. Until then, the DXY would remain supported around the 100.50-100.80 zone. If the inflation rate surpasses expectations, the dollar could rise above 102.50 levels, said CR Forex Advisors MD, Amit Pabari.
Pabari added that the currency pair could experience a consolidation phase for a few more sessions before breaking out. However, the pair is expected to move upwards towards 82.50-82.80 levels. In the domestic equity market, the 30-share BSE Sensex rose by 57.62 points or 0.09% to 61,821.87 points, while the broader NSE Nifty advanced by 22.80 points or 0.12% to 18,287.20 points.
Foreign Institutional Investors (FIIs) purchased shares worth Rs 2,123.76 crore on Monday, according to exchange data. Their interest in the Indian capital market was reflected in the positive performance of domestic equities. Despite the rupee’s depreciation, the inflows of foreign funds and the upbeat mood of the domestic equity market prevented the local currency from experiencing a sharp decline.
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