Fresh dollar demand from banks and importers weighed on the Indian currency
The rupee Thursday slumped 22 paise to 70.08 against the US dollar in early trade on rising global crude prices and fresh demand for the American currency from importers. However, the dollar’s weakness against some currencies overseas and a higher opening of the domestic equity markets capped the rupee’s losses, foprex dealer said.
Fresh dollar demand from banks and importers weighed on the Indian currency, they added.
At the Interbank Foreign Exchange (forex) market, the rupee opened on a weaker note at 70.06 against the US dollar, and further fell to quote at 70.08, a decline of 22 paise over its previous close.
The rupee Wednesday had declined by 24 paise to close at 69.86 against the greenback.
Global benchmark Brent crude advanced by 0.04 per cent to USD 74.60 per barrel. Crude prices continue to remain at elevated level that negatively affects the domestic currency.
A possible increase in fuel prices due to the US sanctions on Iranian crude exports can have adverse impacts on the current account deficit (CAD), the rupee and inflation, according a Care Ratings report.
A 10 per cent spike in crude prices can result in a 0.40 per cent widening of the CAD, which can consequently play out into a 3-4 per cent depreciation in the rupee and also push up inflation by 0.24 per cent, the ratings agency has said.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, edged lower by 0.15 per cent to 98.02.
Meanwhile, equity benchmark BSE Sensex was trading 42.83 points or 0.11 per cent higher at 39,097.51, and the NSE Nifty rose 22.95 points or 0.20 per cent to 11,749.10.
Foreign institutional investors emerged as net buyers in the capital markets, putting in Rs 974.88 crore Wednesday, according to the provisional data.