The Indian rupee witnessed a slight depreciation of 5 paise against the US dollar in early trade on Wednesday, influenced by elevated crude oil prices and the continued strength of the American currency, casting a shadow over investor sentiment.
According to foreign exchange experts, the rupee’s decline can be attributed to the robust performance of the US dollar and consistent foreign fund outflows observed over the past few days.
As the interbank foreign exchange market opened for trading, the domestic unit commenced at 83.08 and subsequently touched 83.09, marking a 5 paise decline from its previous closing rate.
During the previous trading session, the rupee experienced a significant setback, plunging by 33 paise to close at 83.04 against the US dollar.
On the international stage, the dollar index, which gauges the strength of the greenback against a basket of six major currencies, registered a marginal dip of 0.09 percent, settling at 104.71.
Meanwhile, Brent crude futures, recognized as the global oil benchmark, showed a modest increase of 0.07 percent, reaching $90.10 per barrel.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, provided insights into the dynamics of the oil market. Bhansali revealed that Saudi Arabia and Russia had significantly disrupted the oil landscape by extending production cuts until December, propelling Brent oil prices to $90.19 per barrel. He emphasized that this extension had implications for tighter oil supplies over the next four months, as market expectations had initially pointed to a supply cut until October. Bhansali also underscored the significance of oil imports for India and noted that any surge in oil prices could contribute to an expanded Current Account Deficit.
Furthermore, Bhansali highlighted that the rupee faced downward pressure amid rising oil prices, as the Reserve Bank of India (RBI) permitted movement above the 83 mark. This development was influenced by escalating demand from oil companies, further strengthening the position of the US dollar.
In the domestic equity market, the 30-share BSE Sensex posted a modest gain of 76.15 points or 0.12 percent, trading at 65,856.41. Simultaneously, the broader NSE Nifty witnessed an uptick of 18.35 points or 0.09 percent, reaching 19,593.25.
Exchange data revealed that Foreign Institutional Investors (FIIs) engaged in net selling activities within the capital markets on Tuesday, offloading shares valued at ₹1,725.11 crore.
