New Delhi, August 4 – The Indian rupee declined against the US dollar on Monday, falling by 11 paise to 87.29 in early trade. The weakening was driven by growing concerns over potential US import tariff hikes and continued outflows of foreign investment from Indian markets.
While a softer US dollar and easing crude oil prices provided some cushion, the support was limited. The rupee opened at 87.21 at the interbank foreign exchange market, down from the previous close, reflecting an 11 paise loss.
Key Factors Behind the Rupee’s Decline:
- Uncertainty over US tariffs: Speculation around the US increasing import duties has dampened investor sentiment globally, putting pressure on emerging market currencies like the rupee.
- Foreign Institutional Investors (FII) selling: On Friday, FIIs offloaded Indian equities worth ₹3,366.40 crore, contributing to the rupee’s depreciation.
- Increased demand for the US dollar: A steady demand for the greenback in the forex market added further pressure on the domestic currency.
Supporting Factors:
- Weakening US Dollar Index: The dollar index, which measures the strength of the greenback against a basket of major currencies, dropped by 0.40% to 98.74, providing slight relief to the rupee.
- Decline in crude oil prices: Brent crude fell by 0.26% to $69.49 per barrel, a positive development for oil-importing countries like India.
- Strength in domestic equities: The BSE Sensex rose 262.90 points to reach 80,861.80 in early trade, while the NSE Nifty 50 advanced 98.50 points to 24,663.85, reflecting bullish sentiment in domestic markets.
All Eyes on RBI’s Next Move
Investors are now focused on the Reserve Bank of India’s upcoming monetary policy decision. Any move by the RBI to adjust interest rates or intervene in the currency markets could significantly influence the rupee’s direction.
The rupee’s trajectory in the near term will likely depend on a combination of global economic developments and domestic policy decisions.
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