The Indian rupee experienced a minor setback, closing 2 paise lower at 83.03 (provisional) against the U.S. dollar on Thursday. This decline was primarily attributed to the escalating prices of crude oil and the resilience of the American currency in international markets.
Positive Domestic Trends Offered Some Relief
Despite these challenges, the rupee found some support from the positive trends in domestic markets, according to forex traders. Starting at 82.98 against the U.S. dollar at the interbank foreign exchange market, it oscillated between 82.93 and 83.04 throughout the day before settling at 83.03 (provisional), marking a 2 paise decrease from its previous close of 83.01 on Wednesday.
External Factors Impacting Rupee
Anuj Choudhary, a Research Analyst at Sharekhan by BNP Paribas, commented on the rupee’s performance, saying, “The Indian rupee fell on Thursday on a positive U.S. Dollar and rising crude oil prices. This may impact the external payments.” He highlighted the role of the robust U.S. dollar and concerns about rate hikes, driven by higher-than-expected CPI (Consumer Price Index) data.
Dollar Index Inches Up, Crude Oil Prices on the Rise
Meanwhile, the dollar index, measuring the strength of the U.S. dollar against a basket of six major currencies, saw a slight uptick of 0.01% to reach 104.77. Simultaneously, Brent crude futures, the global oil benchmark, surged by 0.70% to reach $92.52 per barrel.
Rupee’s Future Prospects
Choudhary suggested that potential intervention by the Reserve Bank of India and the continued positivity in domestic markets could provide support to the rupee at lower levels. However, traders are likely to exercise caution in the lead-up to the release of U.S. retail sales and Producer Price Index (PPI) data, which is anticipated to show a softer trend compared to the previous month. These external economic indicators will be closely watched for their potential impact on currency markets.