The rupee opened weak earlier in the day, hitting a new all-time low of 90.43 amid selling pressure from foreign investors and rising crude oil prices. The delay around the announcement of the India-US trade deal has also weighed on the rupee.At the interbank foreign exchange market, the rupee opened at 90.36. It fell further to a record low of 90.43 against the dollar on initial deals, registering a loss of 28 paise against the previous closing level.
At the end of Thursday’s trading session, the rupee was trading at 89.96 (provisional), up 19 paise from the last close.
On Wednesday, the rupee crossed the 90 level per dollar for the first time and settled at a new all-time low of 90.15 against the dollar.
Meanwhile, Chief Economist Anantha Nageswaran on Wednesday said the falling rupee will not impact inflation or exports.
A falling rupee boosts outbound shipments but makes imports more expensive.
Import-dependent sectors such as gems and jewelry, petroleum and electronics may see lower benefits due to a rise in input costs, putting pressure on inflation expectations, he said at an event on Wednesday.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.01 percent lower at 98.84.
Brent crude, the global oil benchmark, rose 0.22 percent to USD 62.81 per barrel in futures trading.
“We expect the rupee to trade on a negative impact due to continued selling pressure from financial institutions and a weak tone in domestic markets. Increased crude oil prices could also put pressure on the rupee,” said Anuj Choudhary, research analyst at Mirae Asset ShareKhan.
Forex traders said multiple pressures such as foreign fund outflows from equities and continued uncertainty over the Indo-US trade deal are keeping investor sentiment vulnerable.
However, weakness in the US dollar amid a disappointing jobs report and increasing chances of a Fed rate cut in December could support the rupee at lower levels, Choudhary said.
“Any further central bank intervention could also support the rupee. Traders can also take cues from the weekly jobless claims data from the US. Investors remain cautious ahead of the RBI’s monetary policy decision this week,” Choudhary said, adding, “The USD-INR spot price is expected to trade within a range of 89.65 to 90.50.”
On the macroeconomic front, India’s GDP has already surprised positively, with the latest HSBC India Services PMI – a key index that measures whether companies are growing or slowing – rising to 59.8 in November, supported by strong new orders.
The decision of the six-member rate-setting panel, headed by RBI Governor Sanjay Malhotra, will be announced on Friday.
The meeting comes against the backdrop of falling inflation, rising GDP growth, the rupee crossing 90 against the dollar and ongoing geopolitical tensions.
In the domestic equity market, the Sensex climbed 158.51 points to 85,265.32, while the Nifty rose 47.75 points to 26,033.75.
According to stock exchange data, foreign institutional investors sold shares worth Rs 3,206.92 crore on a net basis on Wednesday.
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