Currency Market News: Rupee falls 6 paise to 83.54 against US dollar in early trade

Currency Market News: The rupee depreciated 6 paise to 83.54 against the US dollar on Thursday, weighed down by the broad strength of the American currency in the overseas market and elevated crude oil prices.

Forex traders said the local unit also faced some resistance owing to subdued macroeconomic data on the domestic front.

At the interbank foreign exchange market, the local unit opened at 83.52 and lost further ground to trade at 83.54 against the greenback, registering a loss of 6 paise from its previous closing level.

On Wednesday, the rupee appreciated 11 paise to close at 83.48 against the US dollar.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 104.78, higher by 0.14 per cent.

Brent crude futures, the global oil benchmark, declined 0.34 per cent to USD 82.32 per barrel.

According to CR Forex Advisors MD Amit Pabari, declining US CPI with the Fed initiating the rate cut in 2024 and overall strong economic fundamentals of the Indian economy, the sentiment for the dollar is likely to be negative. This could push the DXY (Dollar Index)towards 103.50 and lead to an appreciating rupee, Pabari said.

Additionally, the Reserve Bank of India (RBI), with substantial reserves of USD 651 billion, is poised to intervene to prevent significant rupee depreciation.

"Given these factors, the rupee is forecasted to oscillate within a range of 82.90 to 83.70," Pabari added.

On the domestic macroeconomic front, India's industrial production growth slipped to 3-month low of 5 per cent in April 2024, mainly due to poor show by the manufacturing sector, though mining and power segments performed well, according to official data.

Meanwhile, retail inflation continued its downward slide to reach a one-year low of 4.75 per cent in May due to a marginal decline of prices in the food basket and remained within the Reserve Bank's comfort zone of below 6 per cent, according to government data released on Wednesday.

On the domestic equity market, the 30-share BSE Sensex was trading 306.75 points, or 0.40 per cent higher at 76,913.32 points. The broader NSE Nifty rose 115.30 points or 0.49 per cent to 23,438.25 points in initial trade.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Wednesday, as they purchased shares worth Rs 426.63 crore, according to exchange data.