Rupee Edges Lower Against US Dollar amid Strong Greenback, Equities, and Lower Oil Prices

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The Indian rupee experienced a slight depreciation against the US dollar on Monday, closing at 82.64 (provisional), marking a 4 paise fall. This decline can be attributed to the strength of the American currency against major rivals worldwide. However, the rupee’s descent was limited due to positive factors such as a firm trend in domestic equities, foreign capital inflows, and lower crude oil prices. Let’s delve into the details of these factors and their impact on the currency market.

The US dollar displayed strength against other currencies as investors expressed optimism regarding a tentative agreement between US President Joe Biden and Republican House Speaker Kevin McCarthy on the debt ceiling. This agreement, expected to be voted on Wednesday, provided a boost to the dollar, affecting its exchange rate with the rupee.

Despite the depreciation, the rupee found support from a firm trend in the domestic equity market. The 30-share BSE Sensex gained 344.69 points (0.55%) to close at 62,846.38 points, while the NSE Nifty rose by 99.30 points (0.54%) to 18,598.65 points. This positive sentiment attracted foreign institutional investors (FIIs) who were net buyers in the capital market, purchasing shares worth Rs 350.15 crore on Friday. Such foreign capital inflows can bolster the rupee’s performance.

Additionally, lower crude oil prices contributed to curbing the fall in the domestic unit. Brent crude futures declined by 0.40% to USD 76.64 per barrel. Since India is a major oil importer, a decrease in oil prices reduces the country’s import bill, which positively impacts the rupee’s exchange rate.

The Indian rupee faced a slight depreciation against the US dollar, influenced by the strength of the greenback globally. Nevertheless, the currency’s fall was limited due to a firm trend in domestic equities, foreign capital inflows, and lower crude oil prices. The positive sentiment in the equity market, along with optimistic expectations regarding the US debt ceiling, supported the rupee. As the market continues to be influenced by various economic factors, it will be essential to monitor currency movements and their potential implications for trade and investment in the coming days.

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