August 16, 2024
New Delhi, India
Rupee Analysis(USDINR)
The Indian rupee held its ground at 83.94 against the US dollar in early trade on Friday, maintaining stability despite ongoing concerns over high crude oil prices and foreign capital outflows. The rupee’s performance was bolstered by positive sentiment in both domestic and global equity markets, as well as a slight weakening of the US dollar.
Rupee’s Early Trade Performance:
- Opening and Trading Levels: At the interbank foreign exchange, the rupee opened at 83.93 before slipping to its previous session’s closing level of 83.94 against the US dollar. On Wednesday, the rupee had settled 3 paise higher at 83.94.
USDINR was doing 83.9120INR down −0.0080 or −0.01% at 1:26 P.M IST
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Supporting Factors:
- Weaker US Dollar: The US dollar index, which measures the greenback’s strength against a basket of six major currencies, showed a marginal decline of 0.01% to 102.80. This slight weakness in the US dollar provided some support to the rupee.
- Positive Equity Markets: On the domestic equity market front, the Sensex surged by 811.34 points, or 1.03%, to reach 79,917.22 points. Similarly, the broader Nifty index climbed 246.20 points, or 1.02%, to 24,389.95 points, reflecting strong investor sentiment.
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Pressures on the Rupee:
- Crude Oil Prices: Despite the rupee’s stability, concerns over elevated crude oil prices continue to loom large. Brent crude, the global oil benchmark, was down by 0.25% to USD 80.84 per barrel, yet high oil prices remain a potential headwind for the rupee.
- Foreign Capital Outflows: Foreign institutional investors (FIIs) were net sellers in the capital markets on Wednesday, offloading shares worth ₹2,595.27 crore, according to exchange data. The outflow of foreign capital adds pressure on the rupee.
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Macroeconomic Indicators:
- Wholesale Inflation: On the domestic macroeconomic front, wholesale inflation in India fell to a three-month low of 2.04% in July, driven by a decline in food prices, especially vegetables, according to government data released on Wednesday.
- Trade Deficit: India’s exports contracted by 1.2% to USD 33.98 billion in July, while the trade deficit widened to USD 23.5 billion, signaling ongoing challenges in the external sector.
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