Rupee Vs Dollar: Domestic currency falls 3 paise to close at 83.45 against greenback

Currency Market Update: The rupee depreciated by 3 paise to close at 83.45 (provisional) against the US dollar on Wednesday, weighed down by elevated crude oil prices in international markets and persistent foreign fund outflows. A muted trend in domestic equities also dented investor sentiments, forex traders said.

At the interbank foreign exchange market, the local unit opened at 83.36 and touched an intraday low of 83.45 and a high of 83.36 against the greenback. The local unit finally settled at 83.45 (provisional) against the dollar, registering a loss of 3 paise from its previous close.

The rupee on Tuesday consolidated in a narrow range and settled 3 paise lower at 83.42 against the American currency.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.01 per cent lower at 104.80.

Forex traders said rising crude oil prices will have a negative impact on the rupee as it will threaten the current account dynamics of the country. Brent has risen to USD 89 per barrel on fresh supply concerns and escalating conflict in the Middle East.

Brent crude futures, the global oil benchmark, advanced 0.33 per cent to USD 89.21 per barrel.
"We expect the rupee to trade with a negative bias on expectations of a recovery in the US Dollar and risk aversion in global markets. Renewed geopolitical tensions in the Middle East and rising crude oil prices may also pressurise the rupee," said Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas.

However, strength in the domestic markets may support the rupee at lower levels. Any intervention by the Reserve Bank of India may also support the domestic currency, Choudhary said.

Traders may take cues from ADP non-farm employment and ISM services PMI data from the US and Fed Chair Jerome Powell's speech for further cues. "USD/INR spot price is expected to trade in a range of Rs 83.20 to Rs 83.70," Choudhary added.

On the domestic equity market front, Sensex declined 27.09 points, or 0.04 per cent, to settle at 73,876.82 points. The Nifty fell 18.65 points, or 0.08 per cent, to close at 22,434.65 points.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Tuesday as they offloaded shares worth Rs 1,622.69 crore, according to exchange data.

Meanwhile, India's manufacturing sector growth climbed to a 16-year high in March on the back of the strongest increase in output and new orders since October 2020, amid reports of buoyant demand conditions, a monthly survey said on Tuesday.