Today’s Currency Market Update: The rupee weakened by 3 paise to close at 83.45 (provisional) against the US dollar on Wednesday. This was primarily due to high crude oil prices in global markets and continuous foreign fund outflows. Additionally, a lackluster performance in domestic equities also impacted investor confidence, according to forex traders.
During the day, the rupee fluctuated between 83.36 and 83.45 against the dollar at the interbank foreign exchange market. It eventually settled at 83.45 (provisional), marking a 3 paise decline from the previous day’s closing rate.
Yesterday, the rupee had closed at 83.42 against the US dollar after moving within a narrow range throughout the trading session.
On the other hand, the dollar index, which measures the dollar’s strength against other major currencies, was slightly down at 104.80.
Forex experts warned that the rupee could face further challenges as crude oil prices continue to climb, posing a threat to the country’s current account balance. Brent crude futures reached USD 89 per barrel amid concerns about supply disruptions and escalating tensions in the Middle East.
Sharekhan by BNP Paribas Research Analyst Anuj Choudhary stated, “We anticipate a negative bias for the rupee due to expected US Dollar strength and global market risk aversion. Geopolitical unrest in the Middle East and rising oil prices could further weaken the rupee.”
Despite these challenges, domestic market strength and potential RBI interventions might offer some support to the rupee. Traders will closely monitor US economic data releases and Federal Reserve Chair Jerome Powell’s statements for market direction.
In the domestic equity market, Sensex closed at 73,876.82 points, down by 27.09 points (0.04%), while Nifty ended at 22,434.65 points, slipping 18.65 points (0.08%). Foreign institutional investors were net sellers on Tuesday, offloading shares worth Rs 1,622.69 crore.
In positive news, India’s manufacturing sector recorded robust growth in March, reaching a 16-year high. This was driven by strong output and new order growth, indicating favorable demand conditions in the sector.
