The Indian rupee fell 7 paise to settle at 95.95 against the U.S. dollar on Wednesday, its seventh straight losing session. A strong dollar, foreign fund outflows and elevated crude prices drove the decline, while gains in domestic equities limited the fall.
Rupee extends its losing streak
The rupee declined 7 paise to 95.95 (provisional) against the dollar on Wednesday, tracking a strong greenback overseas and foreign fund outflows. At the interbank foreign exchange market, the unit opened at 95.89 and moved between 95.85 and 95.98 before settling at the day's level.
It had already ended 34 paise lower at 95.88 on Tuesday, after weakening by 113 paise in the five sessions since its September 4 close of 94.43. Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the local currency declined on a positive dollar ahead of the Federal Open Market Committee decision.
Elevated crude oil prices and rising U.S. Treasury yields also pressured the rupee, according to Choudhary, because higher oil prices lift dollar demand from importers. According to Choudhary: "positive domestic markets cushioned the downside", and he expects the USD-INR spot price to trade between ₹95.75 and ₹96.20.
Dollar firms as Fed decision looms
The dollar index, which tracks the greenback against six currencies, was trading 0.04% higher at 99.38. It strengthened amid market expectations of an interest rate hike from the Federal Reserve, which was due to announce its monetary policy decision later the same day.
Gulf tensions keep oil elevated
Brent crude, the global oil benchmark, was trading 1.14% lower yet still elevated at $107.51 a barrel in futures trade. Analysts said oil prices had surged as the West Asia conflict flared after attacks from Iranian-backed Houthi rebels in Yemen against Saudi Arabia's shipping and infrastructure, with traders fearing the escalation could disrupt Saudi oil exports out of the Red Sea.
Domestic equities offer a cushion
Even as the rupee slid, domestic equities advanced: the Sensex rose 332.63 points, or 0.45%, to settle at 74,336.45. The Nifty gained 99.00 points, or 0.43%, to close at 23,217.60. Foreign institutional investors, however, offloaded equities worth ₹2,977.86 crore on a net basis on Tuesday.
Source: The Hindu
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