In the morning trade on Tuesday, the Indian rupee struggled to recover despite a weakened US dollar, persisting at the previous day’s record low of 83.34 against the greenback at 11:28 a.m.
Despite the dollar index dropping to 103.20, its lowest in two-and-a-half months, the rupee did not show the expected gain. Traders pointed to importers, particularly oil companies, purchasing more dollars to hedge against potential risks, taking advantage of the low price.
While other Asian currencies benefited from the declining US dollar, the rupee faced challenges. On Monday, the rupee had depreciated by 7 paise, closing at 83.34 against the US dollar. This decline was attributed to the rise in crude oil prices and the outflow of foreign funds from the stock markets.
Brent crude futures, the global oil benchmark, witnessed a 0.66% increase, reaching USD 81.14 per barrel on Monday. Meanwhile, the Sensex dropped by 139.58 points to settle at 65,655.15, and the Nifty fell 37.80 points to 19,694.
Foreign institutional investors (FIIs) were net sellers in the capital markets on Friday, selling shares worth Rs 477.76 crore. India’s foreign exchange reserves also decreased by USD 462 million to USD 590.321 billion for the week ended November 10, posing challenges for the Reserve Bank of India (RBI) to intervene and support the weakening rupee.
The rupee’s earlier record low was 83.33 against the dollar on November 13 of the current year. The rupee’s movements have been within a narrow band, with the RBI intervening by selling dollars when the rupee experiences a sharp decline.
