Indian Rupee Closes at 95.83 Against US Dollar Following 7-Paise Decline
Rupee Depreciates 7 Paise Against US Dollar Amid Geopolitical Tensions
The Indian rupee depreciated 7 paise to close at 95.83 (provisional) against the US dollar on Thursday, as heightened geopolitical tensions between the US and Iran drove energy volatility and aggressive safe-haven buying.
Forex traders have expressed concerns that the prolonged West Asia crisis poses a major risk for India, which relies heavily on energy imports. Market participants are now turning their attention to the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) rate decision on June 5, as inflation, growth, and the rupee are under focus.
The six-member MPC, headed by RBI Governor Sanjay Malhotra, will announce its decision on June 5. At the interbank foreign exchange market, the rupee opened at 95.70 against the US dollar, then touched an intra-day low of 95.85 and a high of 95.59 before closing at 95.83 (provisional), down 7 paise from its previous close.
On Wednesday, the rupee depreciated 40 paise to close at 95.76 against the US dollar. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.31, down 0.21 per cent.
Brent crude, the global oil benchmark, was trading lower by 2.04 per cent at USD 95.81 per barrel in futures trade.
Market analysts expect the rupee to trade with a negative bias on geopolitical tensions and firm US treasury yields. Any bounce back in the US dollar may also pressurise the rupee. Crude oil prices continue to remain elevated.
The high-powered Monetary Policy Committee, headed by RBI Governor Sanjay Malhotra, started its three-day brainstorming on Wednesday amid expectations that the central bank may leave the key policy rate unchanged at 5.25 per cent as the West Asia conflict poses challenges to inflation as well as economic growth.
Read also: Concerns Raised at Parliamentary Panel Meeting Over Rupee and Sluggish Private Investment
| Date | US Dollar Index | Rupee (USD/INR) | Brent Crude (USD/Barrel) |
|---|---|---|---|
| Thursday | 99.31 (down 0.21%) | 95.83 (provisional) | 95.81 (down 2.04%) |
| Wednesday | - | 95.76 (down 40 paise) | - |
On the domestic equity market front, Sensex advanced marginally by 13.84 points to settle at 74,360.01, while the Nifty was up 10.95 points to 23,416.55. Foreign institutional investors offloaded equities worth Rs 5,616.56 crore on a net basis on Wednesday, according to exchange data.
Investor Takeaway
Investors should be cautious of the rupee's depreciation and its potential impact on India's economy.
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