Rupee Depreciates Amid Rising Crude Oil Prices

The rupee fell by 9 paise to 83.63 against the US dollar due to rising crude oil prices and a muted trend in domestic equities. Despite opening higher, the rupee closed lower, with traders influenced by global market conditions and domestic equity performance. Forex experts foresee continued volatility.

The rupee depreciated by 9 paise to close at 83.63 against the US dollar, primarily due to a muted trend in domestic equities and rising crude oil prices.

Initially, the rupee opened higher, buoyed by fresh record highs in domestic equities. However, it lost early gains and followed a downward trend, in line with domestic equity markets that ended in negative territory.

Forex traders noted that the surge in crude oil prices had a significant impact on the rupee, while the US dollar weakened following China's announcement of new economic stimulus measures. At the interbank foreign exchange market, the rupee opened at 83.54 and eventually settled at 83.63.

On the preceding day, the rupee had similarly pared gains to close 2 paise lower at 83.54. 'We expect the rupee to trade with a positive bias given improved global risk appetite and a softer dollar,' stated Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas. However, ongoing high crude oil and commodity prices may limit substantial gains.

Maneesh Sharma, AVP of Commodities & Currencies at Anand Rathi Shares and Stock Brokers, commented that routine dollar payments by importers and high forward premiums contributed to the rupee's depreciation. Domestic equities and rising crude oil prices also played roles.

In equity markets, the Sensex declined by 14.57 points to settle at 84,914, while the Nifty slightly rose by 1.35 points to close at 25,940.40. The dollar index fell marginally, and Brent crude increased by 2.42% in futures trade.

Foreign Institutional Investors were net sellers, offloading shares worth Rs 2,784.14 crore. S&P Global Ratings retained India's growth forecast at 6.8% for the fiscal year and expects the Reserve Bank of India to cut interest rates in October, maintaining a GDP growth forecast of 6.9% for 2025-26 while focusing on inflation targets.

(With inputs from agencies.)