Rupee declines by 15 paise to 74.39 on heavy dollar demand
Mumbai, Aug. 20 (PTI): The rupee on Friday declined by 15 paise to close at 74.39 against the US currency, tracking a lacklustre trend in the domestic equities and strengthening of the American currency in the overseas market.
Analysts said concerns over earlier than expected tapering of asset purchase by the US Federal Reserve and Delta variant hurting the global economy reduced the appeal of riskier assets like emerging currencies.
Forex outflows also impacted the local unit.
At the interbank foreign exchange market, the domestic currency opened lower at 74.38 against the American currency and finally settled at 74.39. During the session, the local unit touched an intra-day high of 74.38 and a low of 74.47 against the US currency.
On Wednesday, the rupee had settled at 74.24 against the US dollar. The forex market was closed on Thursday on account of ‘Muharram’.
“Rupee fell in the opening session as the dollar rose sharply against its global rivals after the release of FOMC meeting minutes that showed Fed members largely expect that later this year they will reduce the central bank’s emergency monthly purchases,” said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.
The minutes also magnified the importance of the next few monthly jobs reports, with solid gains needed to meet the Fed’s expectations and show the virus has not begun to again slow the economy.
HDFC Securities research analyst Dilip Parmar also said that heavy buying in the dollar has been seen as risk sentiment deteriorates amid concern that the Delta virus strain could derail the global recovery and the US Federal Reserves may start tapering earlier than expected.
On a weekly basis, the rupee depreciated by 15 paise against the American currency.
“Indian rupee marked the biggest weekly loss in six weeks and remained the worst performer among Asian peers in today’s session,” Parmar said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.09 per cent higher at 93.65.
Brent crude futures, the global oil benchmark, fell 0.59 per cent to USD 66.06 per barrel.
On the domestic equity market front, the BSE Sensex ended 300.17 points or 0.54 per cent lower at 55,329.32, while the broader NSE Nifty declined 118.35 points or 0.71 per cent to 16,450.50.
Meanwhile, foreign institutional investors were net sellers in the capital market on Wednesday as they offloaded shares worth INR 595.32 crore, as per exchange data.
“Rupee traded mildly weak near 74.40 on back of dollar index strength touching pass $93.50 also weakness and fund outflows from capital markets. The range for rupee can be seen between 74.30-74.60,” Jateen Trivedi, Senior Research Analyst at LKP Securities, said.