Rupee fell 15 paise to 86.10 against the US dollar in early trade on Friday, hit by sustained foreign institutional investor (FII) selling and narrowing bond yield differentials. At the interbank foreign exchange, the domestic unit opened at 85.95 and slipped to 86.10, down from its previous close of 85.95.
Forex traders noted that while most Asian currencies have strengthened against the dollar, the rupee remained under pressure due to market speculation over a possible rate cut by the Reserve Bank of India in the upcoming MPC meeting. This sentiment has been driven by easing food and energy prices, although a cut may support growth in the medium to long term.
The rupee briefly touched a high of 85.77 during the initial session. On Thursday, the rupee had already shed 36 paise to close at 85.95 against the greenback.
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Dollar index retreats
The dollar index, which measures the US dollar’s strength against a basket of six currencies, was trading 0.30 per cent lower at 99.65, signalling possible softness.
“The Dollar Index is showing signs of fatigue as mounting US fiscal concerns weigh on sentiment, potentially declining towards the 99.00 level, and possibly further to 98.50, which could provide relief to Asian currencies and offer near-term support to the Indian rupee,” said Amit Pabari, MD at CR Forex Advisors.Â
Meanwhile, Brent crude futures were down 0.65 per cent at $64.02 per barrel, providing some comfort on the inflation front.
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Stock market summary
Indian equities opened weak on Friday as global concerns and fresh FII outflows cast a shadow on investor sentiment. However, the Nifty50 index opened with a modest gain of 40 points, holding above the 24,600-mark.
FIIs offloaded equities worth Rs 5,045.36 crore on Thursday, continuing their selling streak. With global markets turning cautious, traders are closely watching for cues from central banks and macroeconomic indicators in the coming days.
With inputs from PTI
