News

Published: March 26, 2024
Updated: March 26, 2024

Rupee Weakens Against US Dollar Amid Global Market Pressures

Currency Market Volatility

In the early hours of trading on Wednesday, the Indian rupee experienced a slight depreciation against the US dollar, standing at 82.85, influenced by the prevailing strength of the American currency and escalating crude oil prices. This trend has triggered cautious sentiments among investors, with expectations of the rupee maintaining a marginal negative bias due to the resurgence of the greenback and concerns surrounding elevated oil prices.

Market Analysis

Amidst these market dynamics, a positive undertone in domestic markets may offer some support to the rupee at lower levels, despite the prevailing challenges. The interbank foreign exchange saw the rupee open at 82.82 against the dollar, marking a slight decline from previous levels. Tuesday saw the rupee maintaining a narrow consolidation pattern, closing marginally lower at 82.80 against the US dollar.

Global Factors at Play

The US dollar index, a measure of the currency's performance against a basket of major counterparts, stood at 102.88, registering a modest decrease of 0.07 percent. Meanwhile, traders monitored the release of US CPI inflation data, which surpassed expectations, reaching 3.2 percent, slightly higher than the previous month's figures.

Impact of Oil Prices

Simultaneously, Brent crude futures, the global benchmark for oil prices, climbed to USD 82.38 per barrel, reflecting a 0.56 percent increase. The surge in oil prices adds to the pressure on the rupee, as India is heavily reliant on oil imports to meet its energy demands.

Domestic Market Performance

In the domestic equity market, the Sensex edged up by 39.69 points, or 0.05 percent, reaching 73,707.65 points, while the Nifty experienced a slight dip of 10.10 points, or 0.05 percent, settling at 22,325.60 points.

Investor Activity

Foreign institutional investors (FIIs) remained net buyers in the capital markets on Tuesday, injecting Rs 73.12 crore into shares, according to exchange data.

Macroeconomic Indicators

On the macroeconomic front, India's industrial production growth moderated to 3.8 percent in January, signalling a slowdown in economic activity. However, February's retail inflation remained stable at 5.09 percent, within the Reserve Bank of India's comfort zone for the sixth consecutive month, as per the latest government data.

As global market pressures persist, the Indian rupee faces challenges amidst fluctuating currency dynamics and oil price volatility. While domestic factors offer some resilience, investors remain vigilant amidst evolving economic indicators and geopolitical developments.