Due to the strengthening US dollar and selling by foreign investors, the Indian Rupee weakened to 88.66 per dollar on Friday. The stock market also saw a decline. Although a moderation in crude oil prices offered some relief, the pressure persists.
Rupee vs Dollar: On Friday, the last trading day of the week, the Indian Rupee started on a weaker note. In the interbank foreign exchange market, the Rupee opened at 88.61 per dollar and slipped to 88.66 per dollar in early trade. On Thursday, the Rupee had closed at 88.63 per dollar.
Impact of Dollar's Strength
The US dollar continues to strengthen. The Dollar Index, which indicates the dollar's position against six major global currencies, rose by 0.08 percent to 99.66. This strengthening of the dollar is putting pressure on the Rupee and also affecting the sentiment of foreign investors.
Continued Selling by Foreign Investors
Foreign Institutional Investors (FIIs) are continuously withdrawing funds from the stock market. On Thursday alone, FIIs made net sales exceeding Rs 3,263 crore. These sales have weakened market sentiment and also impacted the demand for the Rupee.
Bearish Sentiment in the Stock Market
The domestic stock market also started on a weak note. The BSE Sensex fell by 610 points to around 82,700. Meanwhile, the NSE Nifty was trading at 25,340, down by 169 points. Selling pressure was observed across almost all sectors.
Impact of Moderation in Crude Oil Prices
A slight decline was observed in international crude oil prices. Brent crude was trading at $63.62 per barrel, down 0.39 percent. This moderation in oil prices is a relief for India, as it reduces import costs. However, this relief does not yet seem sufficient to stem the Rupee's weakness.
Financial analysts suggest that the pressure on the Rupee could persist due to the strengthening dollar, rising global bond yields, and continued selling by FIIs. In the near future, the Rupee might move towards the 88.75 to 88.80 level. However, if crude oil prices remain low, the situation could gradually stabilize.
