Rupee Struggles Amid Rising Crude Prices and Muted Domestic Equities

The Indian rupee closed weaker against the US dollar at 83.63, impacted by rising crude oil prices and a muted trend in domestic equities. Despite opening higher, the rupee lost early gains. Forex traders noted the influence of surging crude prices and anticipated further cues from US economic data.

The Indian rupee depreciated by 11 paise, closing at 83.63 against the US dollar on Tuesday, pressured by rising crude oil prices and a muted trend in domestic equities.

Despite an initial rally spurred by record highs in domestic equities, the rupee lost early gains and ultimately closed in the negative, mirroring the trajectory of the equity markets.

Forex traders cited the surge in crude oil prices and a weaker US dollar, following China's latest economic stimulus, as key factors affecting the rupee's performance. The local currency had opened at 83.54 at the interbank foreign exchange market before closing at 83.63, reflecting a slight decrease from its previous close.

Monday saw a similar trend, with the rupee shaving off early gains to close lower by 2 paise at 83.54 against the US currency. Analysts like Anuj Choudhary of Sharekhan by BNP Paribas expect the rupee to maintain a positive bias driven by improved global risk appetite amid China's economic measures, although high crude oil prices may limit any significant appreciation.

Key market movements include the Sensex declining by 14.57 points to 84,914 and the Nifty marginally rising by 1.35 points to 25,940.40. Internationally, Brent crude rose by 2.42% to 75.69 in futures trade, while the dollar index fell slightly by 0.05% to 100.79.

Foreign Institutional Investors were net sellers, offloading shares worth Rs 2,784.14 crore. Meanwhile, S&P Global Ratings retained India's economic growth forecast at 6.8% for the current fiscal, projecting the Reserve Bank of India (RBI) might begin cutting interest rates in October to stabilize inflation and sustain growth.

(With inputs from agencies.)